A cheerful start to September!

Indian equity markets continued their impressive run??, extending their winning streak to three consecutive weeks. Strong buying from Foreign Institutional Investors (FIIs) and positive global ??market trends fuelled this rally. The Nifty 50 and Sensex both experienced significant gains, with the Nifty climbing 1.7% and the Sensex rising 1.6% weekly. The Nifty 50 index consistently reached new record highs throughout the week, surpassing the psychologically important 25,000 mark??.

India’s economic growth resilience continues…

India’s real GDP growth in the first quarter of fiscal year 2025 (Q1FY25) eased slightly to 6.7%, primarily due to unfavourable base effects. Despite this, the growth was broad-based, with private consumption catching up with investment growth.

???Consumption growth, which had lagged in previous quarters, showed signs of revival in Q1FY25, growing by 7.4%. Supported by public administration and robust private consumption, the services sector grew by 7.2%. The agriculture sector??, however, remained sluggish due to the impact of a recent heatwave.

Favourable monsoons?and kharif sowing are expected to boost agricultural growth in the future. Despite potential downside risks from urban demand fatigue and global economic uncertainty, India’s economic activity remains resilient in the near term. Strong corporate earnings, firming rural demand, reviving government spending, and healthy global demand support this outlook.

…with a stable outlook from the global rating agency

Recently, Fitch Ratings affirmed India’s sovereign debt rating at BBB- with a stable outlook, citing strong growth prospects and fiscal credibility. The government’s successful containment of the fiscal deficit and infrastructure investments have contributed to this positive outlook. Fitch projected India’s GDP growth at 7.2% and 6.5%??in the next two fiscal years (FY25 & FY26), driven by public and private sector investments. While the improved financial health of banks and corporate balance sheets supports investment, subdued consumption and elevated public debt remain concerns. In May this year, S&P Global too revised India’s sovereign ratings outlook from Stable to Positive??.

SEBI’s move for investors’ protection

SEBI has implemented new eligibility criteria for derivative stocks to address market manipulation and index volatility concerns. These changes, which follow proposals released in June, aim to filter out illiquid stocks that can cause sudden and artificial spikes in indices. By requiring stocks to meet stricter liquidity standards, SEBI hopes to prevent large traders from temporarily influencing the market through market??’ injections.’

One of the key measures introduced by SEBI is a significant increase in the minimum median quarter Sigma order size (MQSOS) required for inclusion in the derivatives list. This change ensures that only stocks with higher liquidity are eligible for trading in derivatives, making it more difficult for individuals to manipulate the market????. Suppose a stock fails to meet these enhanced criteria for three consecutive months. In that case, it will be removed from the derivatives segment.

…in the end

Indian stock markets concluded???August on a triumphant note, setting new all-time highs, propelled by robust global market sentiment and a surge in foreign fund inflows??. As September commences, investors will remain vigilant, closely watching domestic and international macroeconomic indicators, monthly??auto sales data, foreign fund flows, crude oil??? prices, and other global factors. The primary market is also set to witness a flurry of activity this week, with several new IPOs and listings scheduled across the mainboard and SME segments. This was all for this week. We’ll be back next week with more market action.

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