Stock indices in India regain ground after three consecutive drops, boosted by positive auto sales figures and GDP data.

The Indian stock market experienced a significant boost on Monday, with the BSE Sensex adding 0.70% to 80,364.49 and the Nifty 50 rising by 0.81% to 24,625.05. This surge was driven by a broad-based rally, as fifteen out of the sixteen major sectors advanced.

The biggest gains were seen in the IT sector, with IT stocks jumping 1.6% due to in-line U.S. Personal Consumption Expenditures data. This data has led to optimism about the economy, as Indian IT firms derive a significant share of their revenue from the world's largest economy. CLSA expects 75 basis points of cuts over the next 1-1.5 years, which could lift valuation multiples of Indian IT firms by 10-15%. Notably, Infosys, a major player in the IT sector, saw a 3.4% increase after announcing a share buyback plan.

The auto sector also performed well, with a 2.8% surge. Bajaj Auto led the way, rising by 3.9%. The broader consumption sector gained by 1.2%, while consumer durables saw a 2.1% increase. This growth can be attributed to the festive season, good monsoon, and GST rationalisation hopes, according to Sunny Agrawal, head of fundamental equity research at SBICAPS Securities.

The hopes of a Federal Reserve rate cut in September remain alive due to in-line U.S. Personal Consumption Expenditures data. Additionally, the broader consumption-driven stocks also surged ahead of a Goods and Services Tax (GST) council meeting later this week.

However, geopolitical risks such as US tariff threats on Indian goods also shaped the market environment. In a recent development, a U.S. court ruled that most of President Donald Trump's tariffs were illegal. The court allowed the tariffs to remain in effect until October 14, giving the administration time to file an appeal before the Supreme Court.

Despite these risks, the market has shown resilience in recent weeks. The biggest gains in the Indian stock market in recent weeks were led by all 16 major sectors posting gains, with the Nifty 50 rising about 1.2% over five trading days and mid- and small-cap indices gaining around 0.5%. This growth was primarily driven by hopes of progress in US-India trade talks, recent tax cuts, and growing expectations of US interest rate cuts, which boosted investor sentiment and foreign investment appeal.

In summary, the Indian stock market has shown a robust performance, with the BSE Sensex and Nifty 50 both experiencing growth. This growth was driven by a broad-based rally, with the IT and auto sectors leading the way. Despite geopolitical risks, the market has shown resilience, driven by positive economic indicators and hopes of progress in US-India trade talks and US interest rate cuts.