India Records 7.8% GDP Growth in Q1 FY27, But Equities Face Pressure From Rising Crude Prices

India’s economic growth for the first quarter of FY27 came in at 7.8 per cent, beating expectations of 7.1 per cent. However, the strong macroeconomic print failed to translate into a market rally, as rising crude oil prices and global risk-off sentiment heavily weighed on domestic equities.

The BSE Sensex closed down 12.99 points, or 0.02 per cent, at 76,944.28, while the Nifty 50 slipped 24 points, or 0.10 per cent, to 24,055.80, marking consecutive sessions of losses. During the weekly options expiry, the Nifty swung between a high of 24,143 and a low of 23,952 before a late recovery in the closing auction session.

Immediate pressure stemmed from the energy sector. Brent crude rose approximately 1.7 per cent to trade near $92 a barrel, and West Texas Intermediate (WTI) gained over 2 per cent to approach $88 following renewed US-Iran tensions. MCX crude futures settled above ₹8,300 a barrel. Global equity markets reflected similar caution, with European indices declining by about 1 per cent over inflation and higher energy cost concerns.

Sectoral performance remained divided. IT and FMCG sectors advanced by about 1 per cent and 0.9 per cent respectively. Conversely, Auto, Pharma, Realty, PSU Banks, and Consumer Durables sectors dropped by over 1 per cent each. Among notable stock movements, ITC climbed 4.3 per cent following ITC Infotech's acquisition of a 22.1 per cent stake in Happiest Minds. TBZ shares surged 20 per cent to a record high after GRT Jewellers agreed to acquire a 74.12 per cent stake for up to ₹1,034 crore. Meanwhile, UltraTech Cement commencing commercial wire and cable production in Gujarat applied downward pressure on Polycab, KEI, and Havells.

Foreign institutional investors (FIIs) poured over $3.2 billion into Indian markets in August, but large-cap equities remained largely range-bound. Industry participants noted that a considerable portion of these inflows arrived via preferential allotments, IPOs, and QIPs instead of secondary-market purchases. Broader markets underperformed as the Nifty Midcap 100 dropped 1.39 per cent and the Nifty Smallcap 100 fell 0.23 per cent, alongside a weak advance-decline ratio of 0.69.

The Indian rupee emerged as a bright spot, gaining 21 paise to close at 84.95 against the US dollar. This marked the currency's third consecutive session of gains and its highest level in two months, aided by Reserve Bank of India dollar supplies and the strong GDP data. Conversely, precious metals declined, with MCX gold falling by roughly ₹1,900 to ₹1,52,500.

Market participants are now turning their attention toward upcoming US non-farm payroll data to gauge the potential interest rate path of the US Federal Reserve. Domestically, analysts view 24,000 as a key support level for the Nifty, with 24,200 to 24,250 acting as immediate resistance.

"While India's robust GDP growth of 7.8 per cent demonstrates strong fundamental economic health, this scenario highlights the reality that domestic markets do not operate in a vacuum. External macroeconomic factors, particularly volatile crude oil prices and global liquidity shifts, continue to dictate immediate equity trends. For businesses and investors navigating the current landscape, it is crucial to look beyond headline GDP numbers and prepare for near-term volatility driven by international energy markets and foreign capital flows." — Dr. Shishir Gupta, Founder & CEO, StartupLanes