Sensex, Nifty Rally on GST Overhaul and Global Tailwinds

Indian equities surged on Thursday as investors welcomed the government’s sweeping overhaul of the Goods and Services Tax (GST), a move expected to boost consumption ahead of the festive season. Supportive global cues, including a weaker U.S. dollar and rising expectations of a Federal Reserve rate cut, further strengthened market sentiment.

The BSE Sensex advanced over 700 points (0.89%) to cross 81,200, while the NSE Nifty climbed 200 points (0.80%) to trade above 24,900. The combined market capitalization of BSE-listed firms rose by ₹1.70 lakh crore to ₹454.99 lakh crore, reflecting renewed investor confidence. Finance Minister Nirmala Sitharaman, after the 56th GST Council meeting, announced a simplified two-rate structure—5% and 18%—while retaining a 40% “sin tax” on tobacco, pan masala, and luxury goods. Dubbed “GST 2.0”, the new framework will take effect from September 22, with the Council also extending compensation cess till October 31.

Analysts hailed the reform as a game-changer. Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, termed the move “revolutionary,” noting its potential to revive demand, lift corporate earnings, and ease household budgets. Consumption-heavy sectors like automobiles, FMCG, cement, insurance, and white goods are expected to gain momentum, even as concerns about U.S. tariffs persist.

Auto Stocks Lead Gains
Automobiles were the day’s standout performers after GST on most vehicles was cut from 28% to 18%. The revised rates cover petrol, hybrid, LPG, and CNG cars (up to 1200cc/under 4000 mm), diesel cars (up to 1500cc/under 4000 mm), motorcycles (up to 350cc), three-wheelers, and goods carriers. A uniform 18% levy on auto parts also simplified the tax framework.

Shares of Mahindra & Mahindra jumped 7.8%, Eicher Motors gained 5.4%, while Tata Motors, Bajaj Auto, and TVS Motors rose between 1–3%. Kotak Securities’ Arun Agarwal observed that on-road prices for two-wheelers, CVs, and tractors could decline by mid-to-high single digits, while passenger vehicles may see reductions in the low-to-high single-digit range—further stimulating demand.

Global and Technical Support
Global factors provided an additional boost. The U.S. dollar index slipped to 98.21 after job openings data pointed to a slowdown, reinforcing bets of a Fed rate cut later this month. A weaker dollar is expected to ease pressure on the rupee, which has been trading near record lows.

Across Asia, markets posted mixed results. While Indian equities mirrored early gains, China’s Shanghai Composite fell 1.6% on regulatory concerns, pulling MSCI’s Asia-Pacific index (ex-Japan) down by 0.2%. Meanwhile, U.S. futures edged higher after dovish Fed commentary lifted rate cut hopes.

Technical experts remain optimistic on the near-term trajectory. Anand James, Chief Market Strategist at Geojit Investments, identified 24,809 as the immediate Nifty target, with the next resistance at 25,025–25,100, while pegging 24,650 as key support.

With domestic reforms aligning with favorable global cues, the market appears poised for further strength as India heads into its peak consumption season.