Nifty September Outlook: Can 7.8% GDP Growth Offset Rising Crude Oil & Global Risks? All you Need To Know

Indian equities today are moving into September with massive impact from both domestic cues and rising global risks.

On one side is the latest GDP numbers that is comfortably beating every forecast on the street. On the other sits a fresh flare-up in the Middle East that has pushed crude oil back above $86 a barrel and dragged global equities lower.

Nifty closed Monday's session at 24,080.40, down 95.25 points or 0.39%, while the Sensex settled at 76,957.27, a loss of 307.24 points or 0.40%. It was the index's fourth consecutive day in the red, with metal, realty and IT stocks leading the decline, even as the broader Midcap segment managed a 0.24% gain. Adani Enterprises, Adani Ports and Eternal were among the sharpest losers on the day.

Early cues for Tuesday aren't offering much relief either. GIFT Nifty was quoting around 24,188 to 24,200, indicating a negative start of around 60 points, as oil prices surged after fresh exchanges of fire between the US and Iran in West Asia. Crude has now risen nearly 8% over the past month, trading at $86.57 a barrel, and that alone has been enough to keep risk appetite in check across Asia.

India's GDP at 7.8%

On Monday, the Ministry of Statistics and Programme Implementation released India's Q1 FY27 GDP data. The economy grew 7.8% YoY in the April-June quarter, comfortably ahead of the Reserve Bank of India's own projection of 7% and well above the 7.1% median forecast in a Reuters poll of economists. Real GDP came in at Rs 81.36 lakh crore, up from Rs 75.46 lakh crore in the same quarter last year.

"A strong GDP growth rate of 7.8% in the first quarter of FY27, despite it being a quarter of the peak West Asia crisis, is a positive surprise. This marks the fourth consecutive quarter of near-potential growth rate for the Indian economy, and momentum into the second quarter of FY27 remains very strong," said Rajni Thakur, Chief Economist, L&T Finance

"Despite some seasonal softening in the primary sector, 9.2% growth in the manufacturing sector and 10% growth in the services sector bode well for a broad-based growth thrust in the economy. While risks from global uncertainties and El Nino remain on the horizon, strong capex, robust credit growth, and continued policy support should sustain economic activities for the rest of the fiscal year and drive it above the 7% level." he further added.

Global Market Performance

Global cues are the bigger factor for the domestic market now. Wall Street closed weak on the Month's final session, with the Dow falling 374 points or 0.7% to 53,185.90, the S&P 500 slipping 0.33% to 7,686.14, and the Nasdaq easing 0.12% to 26,370.89, all pressured by the US-Iran escalation. However, for the month of August itself, all three indices posted solid gains. On the monthly basis, the Dow rose 1.3%, the S&P 500 climbed 2.6% and the Nasdaq advanced nearly 3.9%. This is Dow's fifth month in positive.

Asian markets followed the same sentiment on Tuesday's session. Japan's Nikkei 225 was down around 0.91% with the Topix flat, South Korea's Kospi and the smaller Kosdaq both slipped more than 1%, and Australia's S&P/ASX 200 was down 0.36%.

Nifty Performance Analysis

"The defining move this morning is in bond markets worldwide. The way yields are rising everywhere tells you the market is now firmly pricing a Federal Reserve rate hike this year - the odds of a September hike. Brent crossed $91 in Asian trade this morning after the weekend's escalation, the first US strikes on Iran in a month," said Shrikant Chouhan, Head Equity Research, Kotak Securities.

"We believe the short-term market outlook remains weak, but if the market manages to trade above 23975, we could see a sharp technical pullback from current levels. On the upside, it could bounce towards 24,200-24,300. However, below 23975, selling pressure is likely to increase. If it breaks below this level, it can slide to 23,850-23,800". he further added.

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