Nifty and Sensex Power Ahead after Economic Growth Surpassed Expectations

Arjun Pandit
01 Dec, 2023
Mumbai

Stocks in Mumbai advanced after the Indian economy expanded at a faster than expected pace by a wide margin.

The Sensex index and the Nifty index advanced more than 0.5% after the release of the economic growth data, and stocks in power, manufacturing, and financial services led the gainers.

The total output of eight key infrastructure sectors jumped 12.1% in October from 0.7% in the same month a year ago.

 

September GDP Growth Surpassed Estimates

GDP in the September quarter soared 7.6% from a year ago, the Ministry of Statistics and Programme Implementation reported Thursday.

Economists were anticipating GDP to rise by around 6.3%, and the Reserve Bank of India had estimated the economy to expand at a rate of 6.5% in its latest update.

GDP expanded to ₹41.74 lakh crore from ₹38.78 lakh crore in the quarter a year ago, driven largely by an increase in government spending.

The economy expanded at a 7.7% rate in the first half, reflecting a 7.8% increase in the June quarter and 7.6% in the September quarter.

But the rate of growth is expected to slow down in the second half with the lagged effects of rate hikes, and kharif production is expected to decrease by 4.6% because of El Nino.

In the quarter, the manufacturing sector soared by 13.9%, construction by 13.3%, utilities by 10.1%, mining by 10%, and financial, real estate, and professional services by 6%.

The farming sector expanded by 1.2% because of weaker and erratic monsoon rain, negatively impacting output.

Weakness in the growth in the private sector was visible again in the latest quarter statistics.

Government spending rebounded to 12.4% from the decline of 0.7% from the previous quarter; private sector spending growth slowed to 3.1% from 6.0%; exports rebounded to 4.3% from the decrease of 7.7%; but imports increased by 16.5% from 10.1%.

 

India Indexes and Yields

The Sensex index increased 262.28 points to 66,436.58, and the Nifty index rose 122.95 points to 20,012.60.

On the Mumbai stock exchange, 181 stocks traded at their 52-week highs and 8 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds edged up to 7.29%, and the Indian rupee weakened to ₹83.27 against the U.S. dollar.

The gold price decreased by 0.06% to ₹62,605 per ten grams, and silver increased by 0.05% to ₹77,550 per kilo.

Crude oil decreased by 1.2% to ₹6,325 per barrel, and natural gas fell by 0.2% to ₹234.20 per thermal unit.

Crude oil prices lacked direction after the OPEC+ members agreed to a collective production cut of one million barrels a day, and Saudi Arabia is expected to announce its voluntary production cut of one million barrels a day.

WTI crude oil increased $0.82 to $78.68 a barrel, and natural gas prices rose 2 cents to $2.82 a thermal unit.

WTI crude oil prices declined 6% in November and extended the 9.4% loss in September after uneven recovery in China, global economic uncertainties, and a lack of clarity of oil supplies from U.S.-sanctioned Iran and Venezuela weighed on the commodity prices.

Both the WTI and Brent crude oil prices are down 6.5% and 7.0% in the year so far.

Brazil is set to join the influential OPEC+ group of oil-producing nations in 2024, according to Brazilian Energy Minister Alexandre Silveira.

Gold decreased $4.40 to $2,039.90 an ounce after the U.S. dollar eased, but increased 2.8% in November and extended gains for the second month in a row.

The price of yellow metal jumped 13.1% in the year so far, and silver prices have advanced 10.2% in the month and 10.8% in the year so far.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.23.

 

India Stock Movers

ITD Cementation India increased 6.5% to ₹286.90 after the civil construction company won an order for the construction of a 500 MW hydropower project worth ₹1,001 crore in Andhra Pradesh.

ONGC rose 0.7% to ₹196.35 and Reliance Industries advanced  0.3% to ₹196.35 after the central government lowered the windfall tax on crude oil by ₹1,300 to ₹5,000 per ton.

The windfall tax on jet fuel was lowered to 1.01 lakh per kiloliter from 1.1 lakh per kiloliter.

Flair Writing Industries traded at ₹452.70 after the office products company listed its stock at ₹503 and priced its initial public offering at ₹304 per share.