Benchmark stock market indices ended the trading session on a positive note, driven by gains in heavyweight Reliance Industries Limited (RIL), Bharti Airtel, and major drugmakers like Cipla and Sun Pharma. The S&P BSE Sensex surged by 759.05 points, closing at 79,802.79, while the NSE Nifty50 rose by 216.95 points, ending the session at 24,131.10. This marked a strong recovery after both indices had experienced a decline of approximately 1.5% on the previous day. The recovery indicated investor confidence and resilience in the face of ongoing global and domestic economic challenges.
The broader market also saw positive movements, with volatility declining sharply compared to recent sessions, signaling a potential stabilization in market sentiment. Among the top gainers on the Nifty50 were Bharti Airtel, Sun Pharma, Cipla, M&M, and Tata Consumer Products, reflecting a strong rally in sectors like telecom, pharmaceuticals, and consumer goods. Bharti Airtel’s solid performance was a result of growing optimism around the telecom sector, while Sun Pharma and Cipla’s positive gains reflected the overall strength in the healthcare and pharmaceutical industries, bolstered by improving fundamentals and global demand for healthcare products.
On the flip side, Power Grid, Shriram Finance, Hero MotoCorp, HDFC Life, and Nestle India were among the biggest losers of the day, with their stocks experiencing declines amid broader market shifts. This divergence in performance highlights the selective nature of the rally, where investors have been focusing on certain sectors and stocks with strong earnings potential or growth prospects, while avoiding others that might be facing headwinds.
Shares of Reliance Industries closed the session 1.63% higher at Rs 1,291.50, reflecting the market's optimism regarding the conglomerate's diverse business operations, including its oil and gas, retail, and digital sectors. Reliance’s strong performance is often seen as a barometer for the broader market, given its significant weight in key indices. Similarly, Bharti Airtel ended the day at Rs 1,629, continuing its positive momentum, driven by expectations of growth in the telecom industry amid increasing data consumption and tariff hikes.
Vinod Nair, Head of Research at Geojit Financial Services, attributed the market’s positive performance to a broad-based rally, primarily led by large-cap stocks. He highlighted that discretionary sectors, such as retail and consumer goods, performed well, likely benefiting from the ongoing festive season, which tends to boost consumption and retail spending. This surge in demand during the festive period has traditionally had a positive impact on retail stocks, with many companies in the sector anticipating strong sales during this time. Additionally, the pharma and healthcare sectors experienced renewed growth, driven by strong earnings reports and a correction in valuations following recent market downturns. The positive sentiment surrounding these sectors is expected to continue, given the robust earnings growth potential and the ongoing need for healthcare and pharmaceutical products, particularly in light of global health concerns.
Looking ahead, the focus now shifts to the release of Q2 GDP data, which is expected to provide further insight into the state of the economy. According to a Reuters poll, India’s economy is projected to have slowed to 6.5% year-on-year in the July-September quarter. This is notably lower than the Reserve Bank of India’s (RBI) earlier estimate of 7% growth and the 6.7% recorded in the previous quarter. The anticipated slowdown has been attributed to a range of factors, including slower domestic consumption growth, weaker industrial output, and ongoing global economic uncertainties. However, the market is already factoring in this slowdown, and corporate earnings for Q2 have largely reflected this moderation in growth.
The anticipated slowdown is also reflected in the corporate earnings reports for Q2, which have largely been priced in by the market. Analysts expect that the market will continue to be influenced by corporate earnings results, particularly from large-cap companies, which have the ability to withstand macroeconomic challenges better than smaller firms. Investors are also keeping an eye on how companies in sectors like banking, technology, and infrastructure manage to navigate through the current economic environment.
Additionally, global sentiment remains cautious, partly due to the appreciation of the Japanese yen, which has raised concerns over inflation staying above the central bank’s target level. The yen’s appreciation has led to a ripple effect on global markets, especially in emerging economies, as investors worry about the impact of higher inflation and rising interest rates. Despite these global factors, the domestic market managed to regain some strength, supported by solid corporate earnings and a relatively stable domestic economic outlook. The market’s resilience can also be attributed to the optimism surrounding the upcoming festive season and the potential for strong consumer spending.
As investors await further economic data, including the upcoming earnings reports, the market will likely continue to focus on the broader economic trends and how they may influence the performance of individual sectors and stocks moving forward. The domestic market's outlook is largely dependent on how key macroeconomic indicators, such as GDP growth, inflation, and employment figures, evolve over the coming months. Investors are also likely to keep a close watch on global developments, particularly in relation to trade, inflation, and geopolitical risks, as these factors could influence market sentiment and stock performance in the near term.
