Highlights: U-turn for markets – Nifty closes below 24,800 despite early GST rally; M&M and Bajaj Finance top stars

The Indian stock market ended the day on a mildly positive note, with the Sensex closing at 80,684.19, up 116.48 points or 0.14%, while the Nifty settled at 24,734.30, gaining 19.25 points or 0.08%.

At this hour, Mahindra & Mahindra led the Sensex pack with a gain of nearly 6%, followed by Bajaj Finance, which climbed over 4%. Bajaj Finserv also added close to 2%, while Trent and ITC advanced more than 1% each in the 30-share index.

At this hour, the market is trading firm with the Sensex at 80,769.05, up 201 points or 0.25%, while the Nifty is at 24,818.60, higher by 103 points or 0.42%.

“The strong macro support of a multi quarter high GDP, strong PMI readings meets the income tax cuts meets strong government expenditure meets strong rural demand backed by a robust monsoon meets underperforming markets with low expectations meets on top of all of these tailwinds, a most timely GST cut that will boost consumption, formalisation and unleash festive cheer . Indian markets are well positioned for a pre Diwali rally and we may take out the September 2024 all time highs on the back of all these positive triggers. If Trump drops the punitive 25% tariffs in addition, we may be setting up for a very remarkable Santa Claus rally for the Indian markets,” said market veteran Ajay Bagga.

The GST-rate cut on cement is expected to lower cement prices by Rs 25–30/bag. “While we expect limited near-term demand elasticity, the move positions the industry favourably to enhance net realisations and margins over the medium to long term,” said JM Financial Services. Near-term demand elasticity is expected to remain limited. Ahead of the revised rate implementation (effective September 22), dealers are likely to maintain lean inventory levels. However, a rate cut is supportive for housing demand over the medium to long term, added JM Financial.

Motilal Oswal picks Delhivery as its top pick in the logistics sector. The brokerage expects it to be the key beneficiary of the expected volume increase in categories like consumer durables and electronics, which form a large part of Delhivery’s volumes.

Motilal Oswal said that banking sector benefits from second order flow through as consumption and economic activities should pick up. Household confidence and demand for debt should aso move up and credit growth should move into double digit in the second half of FY26. Direct benefits for consumer heavy lenders, credit card players. The key banking stocks are ICICI Bank, HDFC Bank, and IDFC First Bank.

“The government’s move to simplify GST by reducing slabs from four to three is a smart step. Essential and aspirational goods now largely fall under the 5% and 18% brackets, which makes the system simpler and fairer. Unlike income tax cuts that benefit specific sections, GST rationalisation reaches everyone, especially rural households and the middle class. This comes at the right time, as consumption has been muted for several quarters due to inflation and weak demand,” said Pranav Haridasan, MD and CEO at Axis Securities.

By putting more disposable income in people’s hands, GST 2.0 can reignite consumption and set off a multiplier effect across the economy. Some of the key sectors that stand to benefit from this are insurance, FMCG, automobiles, agriculture equipment, cement, consumer durables, apparel, footwear, QSR, and retail, added Haridasan.

The domestic brokerage house, Motilal Oswal, stated that the resolute stance on simplifying the GST structure should not be seen just as ‘tax reform’ but more as ‘growth reform’. Through simplified rates and processes, the government intends to boost consumption sentiment. As the Prime Minister has indicated, there will be further reform measures across multiple domains, intended to unleash the animal spirits of the economy, providing a shield against the global geopolitical headwinds, added Motilal Oswal.

“We sincerely thank the government for this monumental decision to remove GST from life and health insurance. It sends across a clear message that health and life insurance are critical products for the economy, and hence, they are now GST exempt. Especially, term insurance is a highly crucial product, and this move will positively impact the whole category in an unprecedented way, said Sarbvir Singh, Joint Group CEO of PB Fintech.

By easing the financial burden at a time when healthcare costs are steadily rising, this decision lowers the entry barrier for millions of Indians to secure their well-being and financial future. This move is aimed at promoting financial inclusion, protecting vulnerable households, and creating a culture of long-term security, added Singh. “It will be remembered as a progressive reform that brings reassurance to countless families, while also ensuring product innovation across the board and energising the insurance industry to reach deeper into the heart of India.”

The overall markets have cheered the GST reforms. However, the Information Technology (IT) stocks moved in a different direction today. Led by Coforge, the Nifty IT fell 0.6% to the 35,261.85 level, dragging market gains. Coforge declined 2.15% to trade at Rs 1,694.60 on the National Stock Exchange, followed by Mphasis, Persistent Systems, Wipro, HCL Technologies, and other IT stocks.

“The GST rate cuts come at the right time, which is just ahead of the festive season and against the backdrop of US tariff tiffs. Lower taxes on essentials, FMCG products, autos, and cement will leave consumers with more money in hand. This should directly boost demand, help traders and businesses see higher volumes, and may even favourably impact next quarter’s earnings. It also carries the potential to ease inflation. The key will be how quickly companies pass on the benefits to customers, and if done well, this move can lift both sentiment and spending,” said Shripal Shah, MD & CEO at Kotak Securities.

The insurance stocks have surged in Thursday’s trade as the GST council decided that health and life insurance will not attract any kind of tax. ICICI Lombard General Insurance rose over 3% to trade at Rs 1,877.60 on the National Stock Exchange. Other insurance stocks like Star Health & Allied Insurance, Niva Bupa Health Insurance, The New India Assurance, Life Insurance Corporation, HDFC Life Insurance, ICICI Prudential Life Insurance, SBI Life Insurance, GO Digit General Insurance, and many others surged.

Markets opened on a strong note following the government’s significant GST rate cuts, aimed at benefiting the common man and boosting consumption, economic growth, and structural reforms. In response to the recent 50% tariff imposed by the US on Indian products, the GST Council has taken decisive steps by reducing rates across a broad range of sectors, including insurance, medicines, and daily essentials, providing substantial relief to households, farmers, and industries, said Motilal Oswal.

“The rate rationalisation primarily targets labour-intensive sectors, agriculture, and healthcare — key pillars of India’s economic engine. Notably, around 90% of items previously taxed at 28% GST have been moved to the 18% slab, while nearly 99% of goods in the 12% category now fall under the 5% bracket,” added Motilal Oswal.

“The GST council has approved GST rate rationalisation to a two-rate structure (standard rate: 18%, merit rate: 5%) from a 4-rate structure (5%, 12%, 18%, 28% and additional cess) and introduced a special de-merit rate of 40% for select goods/services (cigarettes, CSD). The GST rate for almost all food items (biscuits, instant noodles, nutrition, namkeen, instant coffee, chocolates, ice cream, fruit juices, sauces and cheese) has been cut to 5% from 18%/12% and that for select daily essential personal care categories (soaps, shampoo, hair oil and toothpaste) has been reduced to 5% from 18%,” said Amit Agarwal, Senior Vice President of Fundamental Research at Kotak Securities.

The sharp, broad-based reduction in the GST rates of most food and key personal care categories could revive consumption partially, added Agarwal.

The auto stocks are in top gear. The Nifty Auto index surged the highest among the sectoral indices. Nifty Auto is up 2.25% at 26,355.45. Mahindra & Mahindra is at the top, surging over 7% to an intra-day high of Rs 3,517. M&M is followed by Eicher Motors, TVS Motor, Balkrishna Industries, Tata Motors, and many others.

The share price of Mahindra & Mahindra has topped the charts, surging over 7% to an intra-day high of Rs 3,517 on the National Stock Exchange as soon as markets opened. The stock was the top gainer in the Nifty 50. M&M is trading near its 52-week high of Rs 3,550.

Mahindra & Mahindra, Bajaj Finance, Eicher Motors, Nestle India, and Bajaj Finserv were the top gainers in the Nifty 50 in the early trading hours. However, Coal India, Tata Steel, Hindalco, Reliance Industries, and Zomato (Eternal) were the major losers in the index.

Indian equity indices opened Thursday’s trade on a gap-up note. The Nifty 50 surged 162 points or 0.65% to 24,877, while the Sensex opened 550 points or 0.68% higher at 81,118. Following the benchmarks, the banking index, Nifty Bank, opened 192 points or 0.35% higher at 54,259. The significant gains in the market came after the Central government reformed GST slabs, slashing 18% and 28% rates.

On the daily chart, the Nifty formed a bullish candle with a small lower wick, suggesting buying support at lower levels. Immediate support is placed at 24,600, while stronger support lies near the 24,500 mark. On the upside, resistance is seen at 24,850, followed by a major hurdle at 25,000. A decisive breakout above these levels could trigger fresh buying momentum, said Amruta Shinde, Technical & Derivative Analyst at Choice Broking. Overall, the trend remains constructive as long as the index sustains above its support zones.

In the pre-opening session, the Sensex was at 81,456.67, up 888.96 points or 1.10%, while the Nifty hovered at 24,980.75, higher by 265.70 points or 1.08%.

“On the daily chart, it has formed a bullish candle, and on the intraday chart, it is maintaining an uptrend continuation pattern, which is largely positive. For bullish investors, 24,750 would be the immediate resistance zone. A successful breakout above 24,750 could push the market towards 24,850–25,000. On the other hand, 24,600 and 24,500 would be the key support zones for traders,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities.

“The revolutionary GST reform has come better than expected, benefiting a wide spectrum of sectors. The ultimate beneficiary is the Indian consumer, who will benefit from lower prices. The potential big boost to consumption in an economy that is already in growth momentum will be big and may surprise on the upside. This GST reform, along with the fiscal and monetary stimulus already provided, can trigger a virtuous cycle and boost India’s growth to 6.5% in FY 26 and perhaps 7% in FY 27 with impressive gains in corporate earnings,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

“The strong macro support of a multi quarter high GDP, strong PMI readings meets the income tax cuts meets strong government expenditure meets strong rural demand backed by a robust monsoon meets underperforming markets with low expectations meets on top of all of these tailwinds, a most timely GST cut that will boost consumption, formalisation and unleash festive cheer . Indian markets are well postioned for a pre Diwali rally and we may take out the September 2024 all time highs on the back of all these positive triggers. If Trump drops the punitive 25% tariffs in addition, we may be setting up for a very remarkable Santa Claus rally for the Indian markets,” said market veteran Ajay Bagga.

Markets are likely to extend gains in early trades as positive global cues, coupled with the GST rate rationalisation exercise by the government, are expected to boost sentiment. “This move is expected to drive sales of several FMCG and white goods items during the festive season, and this could have a positive impact on the shares of listed companies going ahead. However, the FII selling spree in local markets and Trump’s higher tariffs on India are creating growth concerns that will continue to weigh on the sentiment. Technically, Nifty is likely to see traction above the 24,903 mark, while the biggest support is seen at 24,336,” said Prashanth Tapse, Senior Vice President of Research at Mehta Equities.

Anand James, Chief Market Strategist at Geojit Investments, stated that the push back above 24,670 encourages looking for 24,809 as the immediate objective and 25,025-25,100 as the optimistic objective. “Meanwhile, we will keep eying the 24,650 region as the key pivot for the day,” he added.