Sensex, Nifty begin September on a high on Q1 GDP surprise; IT, auto stocks drive rally

Sensex, Nifty rise on GDP beat

Indian equity markets kicked off the new week and month on a positive note on September 1, buoyed by better-than-expected GDP data. India’s economy grew 7.8 percent in the first quarter, beating all forecasts and lifting market sentiment. Buying interest was seen across sectors, with IT and auto stocks stealing the show.

At close, the Sensex was up 554.84 points or 0.70 percent at 80,364.49, and the Nifty was up 198.20 points or 0.81 percent at 24,625.05. About 2681 shares advanced, 1320 shares declined, and 173 shares unchanged.

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Broader markets mirrored the optimism. The Nifty Midcap and Smallcap indices surged over 1 percent each, indicating strong participation beyond large-caps. Meanwhile, India VIX, which measures near-term volatility, eased nearly 4 percent, signaling stability in the market.

Auto stocks were the day’s top performers after robust August sales figures. The Nifty Auto index saw all 15 constituents in the green, led by Bajaj Auto, M&M, and Hero MotoCorp. Bajaj Auto reported a 5 percent year-on-year rise in sales, while M&M sales were largely flat. Royal Enfield stole the spotlight with a 55 percent YoY jump, beating Street expectations.

The Nifty IT index also logged gains, with all 10 constituents trading higher. Mphasis led the pack after Morgan Stanley upgraded the stock to ‘Overweight’ and raised its target price to Rs 3,625 from Rs 3,500. Analysts noted that company-specific factors are aligning well, and any global rate cuts could provide further growth tailwinds.

Historically, September has been a muted month for markets, with Nifty declining in six out of the last 10 years. However, this time the month is loaded with key triggers - GST rationalisation talks that may lead to a two-tier tax structure, and the US Federal Reserve’s rate cut decision later this month, which could provide an additional boost to equities.

Analysts at ICICI Securities believe that markets are likely to find strong support around 24,000–24,200, as this zone coincides with the 200-day moving average, key retracement levels. "This suggests a high probability of buying at lower levels, with the primary uptrend likely to continue towards 25,000, which will act as the next resistance."

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