Why has Sensex jumped over 1,100 points in 2 days despite GDP shocker? Nifty nears 24,500

Over the past two sessions, Sensex has added 1,050 points or 1.3 percent.

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26 Aug, 2025 12:21

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Indian equity markets continued to rally on Tuesday, shrugging off concerns from the weak GDP growth data reported last week. NSE Nifty 50 rose 0.85 percent to an intraday high of 24,481, while BSE Sensex surged 700 points to touch 80,949. Over the past two sessions, Sensex has added more than 1,100 points or 1.4 percent.

This rally comes in the face of a seven-quarter low GDP growth rate of 5.4 percent for Q2 FY25, reported last Friday. Experts said that the weak economic data had already been discounted, given prior corrections and lacklustre corporate corporate earnings. The markets are now looking ahead to the Reserve Bank of India’s (RBI) monetary policy announcement due later this week.

Sectoral performance shifts from defensive to rate-sensitive

While Monday’s gains were driven by defensive sectors like pharma, healthcare, and consumer durables, Tuesday’s rally found strength in banking, financial services, metals, and oil & gas stocks. The Bank Nifty index gained 1 percent, with Nifty Financial Services, Nifty Metal, and Nifty Oil & Gas indices also rising nearly 1 percent each.

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Banking and financial services were seen leading the rotation into cyclical and interest rate-sensitive sectors on Tuesday. Gautam Shah, Founder, Goldilocks Premium Research, sees the banking sector as an outperformer in the current environment and expects it to sustain its strength. “Banking is an outperformer, and it is likely to do well. The target for Nifty Bank is 55,000,” said Gautam Shah in a conversation with CNBC TV18.

GDP shocker already priced in by recent market corrections

Market experts believe that last week’s GDP disappointment has been largely priced in, given the recent correction during October-November and disappointing Q1 corporate financial results. “The GDP number of last Friday was probably discounted by the market,” said Shah. “Indices’ handling of adverse newsflow indicates internals are strong,” he added, suggesting that broader participation and sectoral leadership reflect a robust market structure.

Kunal Rambhia, Founder and Fund Manager at The Streets, had also said yesterday that the market correction last month accounted for the weak economic data. He said that the RBI’s response to the GDP figures will be pivotal in shaping investor sentiment.

Nifty outlook and key levels to watch

Experts said to closely watch the 24,500 mark on the Nifty. Shah said that a sustained move above this level would confirm that the uptrend is back on track and significantly improve market momentum. Rambhia said that the upcoming speech by the RBI Governor could provide crucial insights into the central bank’s mid-term policy stance, especially regarding the interest rate trajectory.

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Investor sentiment turns towards RBI rate action

The market’s recent gains may be due to the expectations of policy clarity from the RBI later this week. “Market may have bottomed for the near term,” Shah said, adding that confidence would grow further if the Nifty sustains levels above 24,500.

While reduced Foreign Institutional Investor (FII) selling has lent some support, broader economic factors remain in focus. Vikas Gupta, CEO and Chief Investment Strategist at OmniScience Capital, had pointed to private consumption growth as a silver lining in last week’s GDP data. Private consumption grew at 6 percent, significantly outpacing overall GDP growth and dispelling concerns about consumer demand weakness.

What’s next for investors?

With the RBI’s monetary policy announcement imminent, investor focus will remain on interest rate guidance and its implications for growth. A break above 24,500 could set the stage for sustained momentum in Nifty 50, while banking and financial services are expected to continue driving gains in the near term.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.