RBI’s Upgraded GDP Forecast Sparks Market Optimism; Sensex, Nifty Climb Nearly 2%

RBI

The broader market experienced positive buying interest, with the BSE Midcap and BSE Smallcap indices rising by 0.7% and 1.6%, respectively.

Market Surge Following RBI’s GDP Forecast

Sensex and Nifty saw significant gains, climbing nearly 2% around noon on June 7. This uptick came after the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) revised India’s FY25 real GDP forecast from 7% to 7.2%. The optimistic outlook is fueled by expectations of stronger rural and urban demand, bolstered by favorable monsoon predictions.

The MPC also opted to maintain policy rates at 6.5%, in line with market expectations.

By 1:00 PM, the Sensex had risen by 1,384 points, or 1.8%, to 76,459, while the Nifty 50 increased by 391 points, or 1.7%, to 23,213. Among the traded shares, 2,538 advanced, 771 declined, and 92 remained unchanged.

Further clarity for investors is anticipated with the upcoming US weekly jobless claims report and the weekend ministry allocations in India.

Sectoral Trends

All 13 sectoral indices showed positive trends, with IT, financial services, and oil & gas stocks leading the charge on the Nifty. Notable IT stocks like Infosys, Wipro, and TCS boosted the Nifty IT index by over 3%.

Other sectors, including Nifty Metal, Nifty Pharma, and Nifty Realty, also saw gains ranging from 1-2%.

Insights from Industry Leaders

“The Indian real estate sector continues to scale new heights, with a strong growth outlook. The RBI’s status quo stance is a positive move to bolster overall market confidence,” remarked Ramani Sastri, Chairman and MD of Sterling Developers.

Economic Stability and Market Impact

Manju Yagnik, Vice Chairperson of Nahar Group and Senior VP of NAREDCO, Maharashtra, commented on the RBI’s decision to keep the repo rate at 6.5% for the eighth consecutive time. “This decision ensures economic stability amid global uncertainties and domestic inflation concerns. It also supports the real estate market by making housing more affordable and boosting consumer confidence.”

Yagnik added, “The recent Lok Sabha elections have enhanced economic sentiment, boosting investor confidence through political stability and consistent economic policies.”

Technical Analysis

Sameet Chavan, Head of Research, Technical and Derivative at Angel One, noted that Nifty is expected to find support around 22,600 to 22,500. “Nifty has surpassed the crucial resistance level of 23,000, which calls for a cautious approach as it continues to climb,” he advised.

Notable Gainers and Losers

Key Nifty gainers included Wipro, Bajaj Finance, Infosys, LTIMindtree, and Tech Mahindra. On the losing side were SBI Life, Bajaj Auto, and TCP.

Stock Movements

Tata Chemicals: Shares dropped over 4% following a £1.1 million fine imposed on its subsidiary, Tata Chemicals Europe, by the Chester Crown Court in the UK.

Garden Reach Shipbuilders & Engineers (GRSE): Shares surged by up to 6% after the company emerged as the lowest bidder for a Defense Research and Development Organisation (DRDO) contract.

In conclusion, the RBI’s revised GDP forecast and stable policy rates have significantly bolstered market sentiment, leading to notable gains in major indices and sectors. Investors remain optimistic, closely watching upcoming economic reports and policy developments.

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