Sensex, Nifty Bounce Back as Markets Rally on Strong GDP and U.S. Tariff Ruling

Benchmark indices Sensex and Nifty staged a sharp recovery on September 1, shaking off three straight sessions of losses. The Sensex rose about 0.43% to 80,155.78, while the Nifty 50 climbed 0.42% to 24,527.55 by mid-morning, marking a decisive shift in investor sentiment.

India delivered a stellar 7.8% GDP growth in Q1 (April–June), outperforming both the RBI's forecast of 6.5% and economists’ median estimate of 6.6%. This figure stands as the strongest in five consecutive quarters and beats both the previous quarter’s 7.4% and the year-ago figure of 6.5%, providing a powerful confidence boost to markets. Investor optimism also received another lift following a U.S. appeals court ruling declaring most of former President Donald Trump’s tariffs on Indian goods illegal—even though these remain effective until mid-October. The decision heightened hopes of a favorable Supreme Court outcome.

The rally extended across nearly all sectors, with 15 out of 16 sectoral indices trading in the green. Small-cap and mid-cap stocks surged around 1.1%, outperforming after periods of underperformance. Analysts highlighted that strong domestic economic momentum and stable global cues helped markets start the week on a firm note.

IT stocks were among the biggest gainers, climbing approximately 1.3%, with all 10 constituents of the Nifty IT index in positive territory. Mphasis led gains after receiving an overweight rating from Morgan Stanley. Other individual stocks like Torrent Power and PG Electroplast also rose following major deals and investment announcements, while Sterlite Technologies slipped after a fine was imposed on its U.S. unit.

Investors are also watching the upcoming GST Council meeting scheduled for September 3–4, with discussions on simplifying GST rates expected to provide another market tailwind. However, analysts remain cautious as September has historically been a volatile month for equities, with tariff developments, GST outcomes, and foreign institutional investor flows likely to shape the coming weeks.