Sensex and Nifty Edge Up Amid Volatile Trading, Awaiting Q1 GDP Data

Indian stock indices Sensex and Nifty ended Tuesday’s session with marginal gains despite a volatile trading day. As FPIs resumed buying, indices are nearing lifetime highs. Investors anticipate Q1 GDP data and potential US Fed rate cuts, while IT and financial stocks perform well against declines in FMCG and metal sectors.

In a volatile trading session, Indian stock indices Sensex and Nifty closed Tuesday on a steady note. The indices began flat and oscillated between red and green before closing with marginal gains. Sensex ended at 81,711.76 points, up 14 points, while Nifty closed at 25,017.75 points, up 7.15 points from the previous close.

The indices are gradually inching towards new lifetime highs after recent corrections caused by profit-booking and risk-averse selling by foreign portfolio investors. However, FPIs have resumed buying in India, buoyed by expectations that the US Federal Reserve will cut interest rates in September.

At the Jackson Hole annual symposium, US Federal Reserve Chair Jerome Powell expressed confidence in imminent policy easing, suggesting it may be time to reduce rates as inflation aligns with targets. "The domestic market saw profit-booking near record highs. Positive expectations regarding a potential Fed rate cut in September persist, but recent geopolitical tensions and rising crude oil prices have left investors cautious," said Vinod Nair, Head of Research, Geojit Financial Services.

IT and financial stocks continue to perform well, while FMCG and metal stocks have declined. "The recent shift in FII stance towards the domestic market and the anticipation that the RBI will align with the Fed's actions are expected to foster a positive outlook in the near term," added Nair.

Investors are also looking ahead to Q1 GDP data, scheduled for release on Friday. India's economy is expected to grow at 7.0-7.1 percent in the first quarter of 2024-25, according to a report by SBI Research. The Reserve Bank of India projected GDP growth for 2024-25 at 7.2 percent, with Q1 growth expected at 7.1 percent. Several global rating agencies have also revised their growth forecasts for India upwards.

(With inputs from agencies.)