Sensex, Nifty rise as auto stocks gain after solid Maruti sales

Indian shares rose in choppy trading on Tuesday, helped by gains in automaker stocks after encouraging monthly sales from the country’s top carmaker, with investors looking past data that showed India suffered a bad economic contraction.

By 0518 GMT, the blue-chip NSE Nifty 50 index .NSEI rose 0.55% to 11,450.00 and the benchmark S&P BSE Sensex .BSESN 0.59% to 38,856.90. Both the indexes fell more than 2% each on Monday after a fresh border flare-up between India and China.

Data after markets closed on Monday showed India’s economy contracted 23.9% in the June-quarter, much more than forecast and pointing to a longer-than-expected recovery, with analysts calling for further stimulus.

“We are getting mixed signals from the data. Though India recorded its worst GDP amid COVID-19, the silver lining is that the agrarian economy managed to post positive growth of 3.4% in the June quarter,” said Anita Gandhi, Director at Arihant Capital Markets.

Indian equities have rallied more than 50% since a virus-led crash in March despite a flurry of grim data and rising COVID-19 infections, as huge flows of cheap capital provided by global central banks made heavily discounted stocks attractive.

Sentiment was also supported after a private business survey showed India’s factory activity grew in August for the first time in five months as the easing of coronavirus restrictions spurred a rebound in domestic demand.

The Nifty auto index .NIFTYAUTO was up 1.12% and was the best performer. Shares of Maruti Suzuki India Ltd (MRTI.NS) rose 2% after reporting higher August sales, while Eicher Motors Ltd (EICH.NS) rose 3%.

Refiner Oil and Natural Gas Corporation Ltd (ONGC.NS) was the top laggard on the Nifty, falling about 4% ahead of its quarterly results.

On investors’ radar now is the Indian top court’s verdict on telecom companies’ dues to the government, scheduled for 0600 GMT.

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