Market Cheers As RBI Raises GDP Forecast, Nifty Reclaims 23,100 Mark; What’s Ahead?

Indian market witnessed a surge in midday trading on June 7, with both the Sensex and Nifty climbing over 1%. This upward momentum was fueled by the Reserve Bank of India's (RBI) optimistic revision of India's FY25 real GDP forecast to 7.2% from the previous 7%. The central bank's decision to maintain the policy rates at 6.5%, in line with market expectations, further boosted investor sentiment.

All 13 sectoral indices were in positive territory, with notable gains seen in IT, financial services, and oil & gas stocks on the Nifty. As of 11:00 am, the Sensex surged by 765 points, or 1%, reaching 75,839, while the Nifty 50 climbed 227 points to 23,048. Market breadth strongly favoured gainers, with over 2,500 shares advancing, 682 declining, and 95 remaining unchanged.

The Nifty Auto index saw a 0.6% increase, with Balkrishna Industries and Tube Investments of India emerging as major gainers. Additionally, Hero MotoCorp announced its decision to acquire up to 2.2% additional shares of Ather Energy Private Limited, reflecting confidence in the electric vehicle sector.

The IT sector displayed robust performance, with stocks like TCS, Infosys, HCL Tech, and Tech Mahindra leading the charge. This positive trend in the IT pack has persisted over the last three consecutive sessions, attributed to investors rotating funds and adopting defensive strategies amid uncertainties surrounding the new government formation.

Meanwhile, the metal sector also outperformed other indices, signalling a broad-based uptrend across various segments of the market.

Shares in rate-sensitive sectors such as banking, finance, automobiles, and real estate traded firmly as the RBI opted to maintain the repo rate at 6.5% for the eighth consecutive time. Analysts suggest that while the RBI's decision was in line with expectations, attention now shifts to global cues and the formation of the new cabinet.

Santosh Meena, Head of Research at Swastika Investmart Ltd., expressed optimism regarding the market's strength, anticipating continued bullish momentum with key support at 22,600 for the Nifty.

"The RBI policy aligns with expectations and is not expected to have a major impact on the market. Attention will now shift to the formation of the new cabinet and global cues. Currently, the market appears strong, and there is a good chance that the bullish momentum will continue. The 20-DMA of 22,600 is likely to provide support to the Nifty, while the high of 23,338 is a key hurdle," Meena added further.

Paytm parent company One97 Communications Ltd. witnessed significant gains, with its stock trading up by more than 9%. The circuit filter for Paytm shares was revised upwards to 10%, reflecting increased investor interest.

Garden Reach Shipbuilders surged as it emerged as the lowest bidder for constructing a research vessel for the Defence Research and Development Organisation (DRDO), while Adani Ports secured a five-year operation and maintenance (O&M) contract for the container facility at the Syama Prasad Mookerjee Port in Kolkata through competitive bidding.

The Indian markets exhibited robust performance driven by positive economic forecasts and corporate developments. The RBI's upward revision of GDP growth and steady policy rates, coupled with favourable sectoral trends and corporate actions, instilled confidence among investors. With attention now turning towards global factors and domestic policy initiatives, market participants remain optimistic about sustaining the current bullish momentum.