Indian Stock Indices Surge into 2025 Despite Economic Hurdles

The Indian stock market entered 2025 with strong performances from Sensex and Nifty. Despite upcoming economic challenges like Trump's tariff policies and weak GDP growth, positive market sentiments stem from strong tax collections and Q3 outlooks. Key sectors include auto, tech, and financial services.

Indian stock indices started 2025 on a robust note, with both Sensex and Nifty seeing remarkable rallies on January 1 and 2. Currently, the Sensex stands at 79,752.03 points, marking an increase of 1,244.62 points or 1.59 percent.

According to experts, the forthcoming Q3 results season is expected to be pivotal for market movements, with subsequent attention shifting to the Union Budget and the policy direction of the newly commenced Trump 2.0 administration. Veteran banking and market expert Ajay Bagga highlighted the global significance of Trump's administration.

Gaurang Shah, Geojit's Head Investment Strategist, attributed the boost in market sentiments to better-than-expected advance tax collection numbers, firm GST collections, and a strong Q3 outlook for specific sectors. GST collections in December recorded a 7.3 percent annual increase, amounting to Rs 1.76 lakh crore. Overall GST collections in 2024-25 were 9.1 percent higher, compared to the same period in the previous year.

The Indian stock market reached a two-week high, driven by gains in the auto, tech, and financial services sectors, according to Kedia Advisory. Nonetheless, investors remain cautious due to potential new tariff policies under Donald Trump's new presidency.

Despite the strong start, Sensex still lags nearly 6,000 points behind its all-time high of 85,978 points. While Sensex and Nifty posted around 9-10 percent gains in 2024, they saw 16-17 percent cumulative growth in 2023, and only a modest 3 percent in 2022.

The current economic landscape is marred by weak GDP growth, foreign fund outflows, and rising food prices. Additionally, the Indian rupee is near its all-time low, affected by fewer anticipated Fed rate cuts and a widening trade deficit.

(With inputs from agencies.)