After Friday crash, GIFT Nifty jumps on GDP data. How will stock market react on Monday?

Indian markets ended Friday with a sharp fall, but late data on economic growth has changed the near-term mood. The BSE Sensex dropped 961 points, or 1.17%, to close at 81,287. During the day, it had fallen more than 1,000 points. In a single session, investors lost about Rs 4.98 lakh crore in market value as foreign fund outflows, weak global cues and rising geopolitical tensions weighed on sentiment.

However, after market hours, India's GDP numbers surprised on the upside. The economy grew 7.8% year-on-year in the October-December quarter. While this was lower than the previous quarter's 8.4%, it was stronger than many expectations. For the full financial year ending March, the government now expects growth of 7.6%, higher than the earlier estimate of 7.4% under the old data series.

Following the GDP release, GIFT Nifty jumped, indicating a positive start for markets on Monday.

What drove the GDP surprise?

Maulik Patel, Head of Research at Equirus Securities, said growth was supported by strong manufacturing and services performance. Manufacturing expanded 13.3% YoY, while services such as trade, hotels, transport and financial services posted strong growth.

Private consumption improved sharply to 8.7% growth in the quarter, up from 6% a year ago. This was supported by GST reforms and a strong festive and wedding season. While investment growth slowed slightly, it remains supported by government capital expenditure.

Nitya Shah, smallcase manager and co-founder of Kamayakya, said the 7.8% print is significant not just for the headline number but for what is driving it. He noted that the new GDP series, with base year 2022-23, uses updated GST data and better sector tracking, offering a more realistic picture of the economy.

He added that manufacturing strength, expanding financial services and improving consumption point to a solid domestic engine. With the RBI having already cut rates, the macro setup remains supportive, especially for domestic-focused companies.

Why did markets fall on Friday?

Vinod Nair, Head of Research at Geojit Investments, said markets were under pressure due to weak global cues and rising geopolitical risks. Concerns over US–Iran tensions and AI-related uncertainty pushed investors towards safe-haven assets.

He said a risk-off mood has prevailed as the earnings season winds down and global macro factors take centre stage. However, he had earlier noted that Q3 GDP data could offer support at the margin.

Vinit Bolinjkar, Head of Research at Ventura, said markets had been consolidating around Nifty 25,400 support. He expects continued range-bound trade, with domestic institutional investor support cushioning sharp falls.

What to expect on Monday?

With GIFT Nifty indicating gains after the GDP release, markets may open higher on Monday. Strong growth data could provide near-term support, especially to banking, capital goods and consumption-linked stocks. However, analysts caution that global factors, foreign fund flows and geopolitical risks will continue to influence direction. While GDP numbers show underlying resilience, volatility may not disappear completely.

"Under the new 2022-23 base year, the size of the economy has been revised slightly lower, which could push fiscal deficit and debt ratios marginally higher than earlier estimates. Markets are likely to remain constructive as growth stays healthy, though bond yields may stay firm and the RBI could opt for a pause on further rate cuts," said Ishan Tanna, Senior Associate, Ashika Capital.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)