Author: Aditya Pareek | EQMint | Market News
India’s financial markets are gearing up for a strong start to the week after the country reported a better-than-expected Q2 GDP growth of 8.20% on Friday. Market analysts believe the surprising data print will act as a major sentiment booster for Dalal Street, potentially driving a gap-up opening on Monday and sustaining bullish momentum in the coming weeks.
The stronger-than-anticipated GDP figure, which significantly exceeded most institutional forecasts, is being hailed as a turning point not only for domestic sentiment but also for foreign investor confidence. Analysts expect the data to ignite renewed interest across sectors like banking, manufacturing, infrastructure, automobiles, pharmaceuticals, metals, and mid-caps and small-caps, which have lagged the rally in recent sessions.
Q2 GDP Boosts Confidence Across Markets
The sharp 8.20% GDP growth for Q2FY26 underscores India’s resilience amid global uncertainties. Economists suggest that the rising confidence in the country’s macroeconomic trajectory could set off a chain reaction: ratings upgrades, improved foreign fund flows, stronger earnings expectations, and a broad-based rally.
According to Sandeep Pandey, Co-founder of Basav Capital, the new data print could shift India’s position in the eyes of international rating agencies and global financial institutions.
“The Indian GDP print for Q2FY26 is expected to change the view of global institutions like the IMF and a rating upgrade from the global body is expected in the near term,” Pandey said.
“This is expected to change the mindset of foreign investors about the Indian stock market and trigger a trend reversal in FII trade patterns.”
Foreign Institutional Investors (FIIs) have been net sellers in recent weeks, even as benchmark indices hit all-time highs. Analysts believe the strong GDP reading could result in FIIs returning to Indian equities, especially in high-quality mid-cap and small-cap segments.
Broader Market Participation Expected
Market experts note that despite the Nifty 50 and Sensex touching all-time highs last week, the broader markets, particularly mid-caps and small-caps, were under pressure—reflecting selective buying rather than large-scale participation.
However, this trend may be about to reverse. Avinash Gorakshkar, SEBI-registered fundamental equity analyst, pointed out that the strong GDP data provides the spark needed for a broader rally.
“Last week, benchmark indices climbed to record highs, but broad markets were under selling pressure. After the strong Q2 GDP data, this rally on Dalal Street is expected to become a participatory rally as bulls may start looking for value picks in mid-cap and small-cap segments,” he said.
This shift could be crucial for retail investors, who generally hold a larger portion of their portfolios in mid-cap and small-cap stocks.
Nifty 50 Could Test 27,000 in the Coming Weeks
With sentiment turning strongly positive, analysts expect a gap-up opening on Monday. Based on recent technical patterns and bullish fund flows, the Nifty 50 index may attempt to scale new highs soon.
According to Sandeep Pandey:
“Bulls are expected to outshine bears when the Indian stock market opens on Monday. The Nifty 50 may touch 26,500 in the first few sessions next week. If it closes above 26,500, we may expect the index to reach 27,000 levels next month.”
He added that Nifty’s crucial support zone lies between 25,750 and 25,800. As long as the benchmark remains above this range, the market structure will remain firmly positive.
Top Sectors Expected to Lead the Rally
Experts predict that banking and manufacturing sectors will spearhead the next leg of the market rally. Manufacturing, in particular, has been supported by rising domestic demand, improved capex cycles, and strong corporate balance sheets.
Sectors expected to outperform:
- Banking (PSU & Private)
- Automobiles
- Infrastructure & Capital Goods
- Metals
- Chemicals & Paints
- Pharmaceuticals
- Oil & Petrochemicals
These sectors are seen as immediate beneficiaries of improving macro fundamentals and stronger earnings projections for the second half of FY26.
15 Stocks to Buy on Monday, According to Analysts
Based on expert recommendations, the following 15 stocks are likely to react sharply when the markets open:
Banking
- ICICI Bank (private bank pick)
- State Bank of India (SBI)
- Canara Bank
- Indian Bank
- Union Bank of India
Manufacturing, Infra & Capital Goods
- Larsen & Toubro (L&T)
- Cochin Shipyard
- Mazagon Dock Shipbuilders
Automobiles
- Mahindra & Mahindra (M&M)
- Bajaj Auto
Chemicals & Paints
- Asian Paints
Pharmaceuticals
- Cipla
- Dr Reddy’s Laboratories
Metals & Energy
- Tata Steel
- Reliance Industries
These stocks are expected to benefit from improved economic momentum, sector-specific tailwinds, and renewed investor confidence following the GDP data.
Why the GDP Surprise Matters
Economists attribute the strong GDP print to several factors:
- Statistical and deflator-related advantages
- Lagged effects of earlier monetary easing
- Supportive regulatory environment
- Limited disruption to exports
- Gradual recovery in domestic consumption
Madhavi Arora, Chief Economist at Emkay Global, said:
“Q2 GDP growth exceeded expectations dramatically at 8.2%, supported by favourable deflator effects, lagged monetary and regulatory easing, and limited hit so far on exports. Consumer demand improvement is likely to keep FY26 GDP comfortably above 7%.”
A stronger-than-expected GDP reading not only reinforces India’s position as the fastest-growing major economy but also strengthens its appeal to global investors amid a period of global economic uncertainty.
Conclusion: All Eyes on Monday’s Opening
With the combination of strong macroeconomic data, upbeat analyst commentary, and improving global sentiment, Monday’s market session is being watched closely. A gap-up opening seems likely, but the sustainability of the rally will depend on follow-through buying, FII participation, and how mid-cap and small-cap segments perform.
While optimism is high, analysts advise investors to focus on quality stocks with solid fundamentals, especially in the mid-cap and small-cap spaces, to build wealth in the emerging bullish cycle.
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Disclaimer: This article is based on information available from public sources. It has not been reported by EQMint journalists. EQMint has compiled and presented the content for informational purposes only and does not guarantee its accuracy or completeness. Readers are advised to verify details independently before relying on them.
