Indian markets dip despite robust 7.8% GDP growth on weak global cues

Indian benchmark indices opened lower despite a strong 7.8% Q1 GDP growth. The decline is attributed to negative global cues, elevated crude oil prices, rising US Treasury yields, and significant selling by Foreign Institutional Investors (FIIs).

Market Opens Lower Despite Strong GDP

Indian benchmark indices opened lower on Tuesday, despite the domestic economy recording robust GDP growth of 7.8 per cent in the first quarter, as weak global cues, elevated crude oil prices and rising US Treasury yields continued to weigh on investor sentiment. The BSE Sensex stood at 76,862.13 points, declining 95.14 points or 0.12 per cent, while the NSE Nifty 50 traded at 24,059.05 points, down 21.35 points or 0.09 per cent.

The subdued opening came despite stronger-than-expected domestic macroeconomic fundamentals, with India's Q1 GDP growth of 7.8 per cent providing reassurance about the underlying strength of the economy. However, investors remained cautious amid pressure from global markets, higher crude oil prices and elevated US bond yields.

Asian Markets Reflect Weak Sentiment

Asian markets broadly reflected the weak global sentiment. Hong Kong's Hang Seng fell 1.11 per cent to 25,284.00, Singapore's Straits Times declined 0.71 per cent to 5,714.59, while Japan's Nikkei 225 slipped 0.21 per cent to 66,170.00. GIFT Nifty was also subdued, declining 0.31 per cent to 24,152.00. Defying the broader regional trend, the Taiwan Weighted Index rallied 1.50 per cent to 46,821.31. Jakarta gained 0.86 per cent, Thailand's SET rose 0.10 per cent, while the Shanghai Composite edged up 0.03 per cent.

Expert Outlook and Key Risks

Commenting on the market outlook, V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the 7.8 per cent Q1 GDP growth was reassuring and indicated that India remained on track to achieve around 7 per cent growth in FY27. "Services and secondary sectors growing at 10 per cent and 8.5 per cent, respectively, reflect a robust economy which can deliver decent earnings growth in FY27," he said.

However, Vijayakumar cautioned that global headwinds could weigh on equities in the near term. "This has the potential to keep the market resilient, but in the near term, the global headwinds from elevated crude and excessive US bond yields might impact the market negatively," he said.

He noted that the US 10-year bond yield at 4.77 per cent and the 30-year yield at 5.24 per cent remained negative factors for equity markets, potentially encouraging a flight of capital towards safer US bonds. "During the last two days, FIIs had sold equity worth Rs 13,025 crore in the cash market," Vijayakumar added.

Global Pressures and Technical Levels

Global equity markets also remained under pressure. In overnight US trading, the S&P 500 declined 0.33 per cent to 7,686.14, while the Nasdaq fell 0.12 per cent to 26,370.89. Dow Jones Futures, however, traded marginally higher, gaining 0.12 per cent to 53,248.56.

On the technical front, Rajesh Palviya, Head of Research at Axis Direct, said the near-term market undertone remained cautious as long as the Nifty traded below 24,200. "Immediate support is placed at 23,900, followed by 23,800. A sustained recovery in crude prices could continue to weigh on sentiment, while any meaningful cooling in crude may help the market regain its recovery trajectory," he said.

Crude oil prices remained elevated, adding to concerns for oil-importing economies such as India. At the time of reporting, Brent crude climbed 0.73 per cent to USD 91.15 per barrel, while WTI crude rose 1.03 per cent to USD 86.64 per barrel. Gold edged lower by 0.06 per cent to trade at USD 4,438.51.

Thus, while the strong Q1 GDP print offers support to the domestic growth outlook, Indian equities remain vulnerable in the near term to global risk aversion, higher US yields, foreign fund outflows and elevated crude oil prices. (ANI)

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)