How Did GST Reforms Propel Sensex to Over 550 Points in Morning Trade?
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Synopsis
The Indian stock market witnessed a notable surge today, driven by the recent GST rate reductions across various sectors. With Sensex gaining over 550 points and Nifty Auto leading the charge, experts predict a significant boost in consumption and corporate earnings. What does this mean for the economy's future? Dive into the details.
Key Takeaways
- Indian benchmark indices opened higher due to GST rate cuts.
- Sensex rose by 554 points and Nifty by 159 points.
- GST rate reductions affect essential goods and services.
- Nifty Auto was the top gainer, rising 2.51%.
- Analysts predict GDP growth of up to 7% in the coming years.
Mumbai, Sep 4 (NationPress) The Indian benchmark indices opened on a positive note this Thursday, invigorated by the remarkable rate cuts introduced by the GST Council across various sectors.
At 9:25 am, the Sensex surged by 554 points or 0.69 percent, reaching 81,122, while the Nifty climbed 159 points or 0.64 percent, settling at 24,874.
The broader market indices saw Nifty Midcap 100 gaining 0.21 percent, and Nifty Smallcap 100 inching up 0.05 percent.
The GST Council's decision to lower rates on insurance, medications, and essential goods has provided considerable relief to households, farmers, and businesses.
Significantly, nearly 90 percent of items that were previously taxed at a rate of 28 percent have now been shifted to the 18 percent category, and close to 99 percent of goods previously in the 12 percent bracket are now classified under the 5 percent rate.
Among sectoral indices, Nifty Auto emerged as the top performer, advancing by 2.51 percent, followed by Nifty FMCG with a gain of 1.73 percent. Nifty IT, Nifty Metal, and Nifty Pharma faced declines.
In the Nifty pack, major gainers included HUL, Grasim Industries, Bajaj Finserv, and Trent, while the losers comprised NTPC, Reliance Industries, Hindalco Industries, and HCL Technologies.
Analysts believe that the reform in GST, paired with fiscal and monetary stimulus, could set off a virtuous cycle that may elevate India’s growth to 6.5 percent in FY26 and potentially to 7 percent in FY27, alongside significant corporate earnings growth.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, commented, "The groundbreaking GST reform has exceeded expectations, benefiting a wide range of sectors. The substantial boost to consumption in an economy already gaining momentum could be crucial."
“The focus of market bulls will likely be on automobiles, FMCG, white goods, cement, and insurance. There’s a strong likelihood of short covering today, pushing prices beyond expectations. However, after the initial excitement, tariff challenges may continue to affect the market," he added.
Asian markets showed an upward trend on Thursday following a tech rally on Wall Street, although rising recession concerns continue to weigh on equities.
In the U.S., the Dow Jones Industrial Average fell by 0.05 percent, while the Nasdaq rose by 1.03 percent, and the S&P 500 edged up by 0.51 percent.
Asian markets displayed mixed results; China’s Shanghai index dropped by 1.71 percent, and Shenzhen fell by 2.19 percent. Conversely, Japan's Nikkei increased by 1.23 percent, while Hong Kong's Hang Seng Index declined by 1.06 percent. South Korea's Kospi saw a slight increase of 0.38 percent.
On Wednesday, foreign investors (FIIs/FPIs) were net sellers, with outflows amounting to Rs 1,666 crore from Indian equities, while domestic institutional investors (DIIs) net purchased shares worth Rs 2,495 crore.
Point of View
The recent GST reforms represent a pivotal shift in India's economic landscape. This move is expected to stimulate growth and bolster corporate earnings, aligning with the nation's goals of enhancing economic stability and consumer confidence. As we navigate these changes, it is crucial to monitor market responses and sectoral performances.
NationPress
04/09/2025
Frequently Asked Questions
What impact will the GST rate cuts have on the economy?
The GST rate cuts are expected to stimulate consumption, boost corporate earnings, and enhance overall economic growth, potentially raising GDP growth rates to around 7%.
Which sectors are likely to benefit the most from the GST reforms?
Key sectors such as automobiles, FMCG, cement, and insurance are anticipated to benefit significantly from the GST reforms.
How did the stock markets react to the GST reforms?
The stock markets opened higher, with the Sensex gaining over 550 points, reflecting positive investor sentiment in response to the GST reforms.
What are analysts saying about the future of the Indian economy?
Analysts are optimistic that the combination of GST reforms along with monetary and fiscal stimulus will create a virtuous cycle, enhancing growth prospects for India.
What should investors keep an eye on following these reforms?
Investors should closely monitor sectoral performances, especially in automobiles and FMCG, as well as any potential tariff issues that may arise.
