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Markets trade firm after gap-up start on GST rate cuts
Sep-04-2025

Indian equity benchmarks made gap-up opening on Thursday after the Goods and Services Tax (GST) Council approved a new dual-slab structure of 5 percent and 18 percent, and scrapped the existing 12 percent and 28 percent rates, in a landmark move aimed at simplifying India's indirect tax regime. The revised structure will be implemented from September 22. The positive momentum raised hopes for a strong pre-Diwali rally. Sensex and Nifty were trading firm in early deals led by gains in Auto and FMCG stocks. Some support came as Foreign Direct Investment (FDI) in India rose 15 per cent to $18.62 billion during April-June this fiscal year, while the inflow from the US nearly tripled to $5.61 billion during the quarter despite tariff issues.

On the global front, Asian markets are trading mixed, following the mixed cues from Wall Street overnight, as traders remain optimistic that the US Fed will lower interest rates by at least a quarter point later this month after a report showed job openings in the U.S. fell to their lowest level in ten months in July.

The BSE Sensex is currently trading at 81160.52, up by 592.81 points or 0.74% after trading in a range of 81044.53 and 81456.67. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.41%, while Small cap index was up by 0.39%.

The top gaining sectoral indices on the BSE were Auto up by 2.30%, FMCG up by 1.58%, Consumer Discretionary up by 1.40%, Realty up by 0.83% and Consumer Durables up by 0.73%, while IT down by 0.24%, Oil & Gas down by 0.24%, Metal down by 0.23%, Energy down by 0.19%, TECK down by 0.10% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 6.52%, Bajaj Finance up by 3.86%, Bajaj Finserv up by 2.07%, ITC up by 2.03% and Trent up by 1.76%. On the flip side, Infosys down by 0.56%, Tata Steel down by 0.42%, HCL Technologies down by 0.33%, Reliance Industries down by 0.32% and Eternal down by 0.26% were the top losers.

Meanwhile, the GST Council at its 56th meeting approved rate overhaul by limiting slabs to 5% and 18% effective from September 22, the first day of Navaratri. At the meeting Centre and states thrashed out key tax proposals. Union Finance Minister Nirmala Sitharaman said all decisions were taken unanimously, with no disagreement with any state. The panel approved simplifying the goods and services tax (GST) from the current four slabs - 5, 12, 18 and 28% - to a two-rate structure - 5 and 18%. A special 40% slab is also proposed for a select few items such as high-end cars, tobacco and cigarettes. The new rates for all products, except gutkha, tobacco and tobacco products and cigarettes, will be effective September 22.

While daily use food items will continue to attract nil tax rate, common use food and beverages ranging from butter and ghee to dry nuts, condensed milk, sausages and meat, sugar boiled confectionery, jam and fruit jellies, tender coconut water, namkeen, drinking water packed in 20-litre bottles, fruit pulp or fruit juice, beverages containing milk, ice cream, pastry and biscuits, corn flakes and cereals, and sugar confectionery are likely to see a cut in tax rate to 5% from the current 18%. All forms of chapati and paratha will be charged nil tax, down from the current rate of 5%. Consumer goods such as tooth powder, feeding bottles, tableware, kitchenware, umbrellas, utensils, bicycles, bamboo furniture and combs will see rate cut from 12% to 5%. The rates on shampoo, talcum powder, toothpaste, toothbrushes, face powder, soap and hair oil has been cut down to 5% from 18%.

Sitharaman said all individual life and health insurance policies will now attract nil tax in a bid to boost coverage. Cement will cost less with the tax rate coming down from 28% to 18%. Petrol, LPG and CNG vehicles of less than 1,200 cc and not more than 4,000 mm length and diesel vehicles of up to 1,500 cc and 4,000 mm length, too, would move to 18% rate from 28%. All cars larger than 1,200 cc for petrol and 1,500 cc for diesel will be charged at 40%. Motorcycles up to 350 cc, consumer electronics like air-conditioners, dishwashers and TVs, too, will be taxed at lower GST of 18% as against 28% currently. All automobiles above 1,200 cc and longer than 4,000 mm as well as motorcycles above 350 cc, yachts and aircrafts for personal use, and racing cars will be attracting a 40% levy. EVs will continue to be charged at 5% GST.

The CNX Nifty is currently trading at 24885.85, up by 170.80 points or 0.69% after trading in a range of 24847.25 and 24980.75. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 6.61%, Bajaj Finance up by 3.97%, Eicher Motors up by 2.86%, Grasim Industries up by 2.46% and Nestle up by 2.37%. On the flip side, Tata Consumer Products down by 0.87%, ONGC down by 0.78%, Tata Steel down by 0.60%, Infosys down by 0.49% and Indusind Bank down by 0.49% were the top losers.

Asian markets are trading mixed; Nikkei 225 surged 536.11 points or 1.28% to 42,475.00, Taiwan Weighted added 173.61 jumped or 0.72% to 24,273.91, Straits Times rose 10.36 points or 0.24% to 4,299.69 and KOSPI added 2.28 points or 0.07% to 3,186.70. On the other hand, Hang Seng declined 308.43 points or 1.23% to 25,035.00, Shanghai Composite weakened 75.24 points or 1.97% to 3,738.32 and Jakarta Composite was down by 21.92 points or 0.28% to 7,863.94.
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