Equity benchmarks opened significantly higher on Thursday as the GST Council’s historic tax rate rationalization boosted investor sentiment across multiple sectors
Indian equity markets opened with robust gains on Thursday, September 4, 2025, as investors responded positively to the GST Council’s landmark decision to streamline tax rates. The Sensex surged 576.63 points to reach 81,144.34, while the Nifty 50 climbed 156.65 points to trade at 24,871.70 in early trading.
Market Opening Shows Strong Momentum
The positive opening reflected widespread investor enthusiasm following the GST Council’s announcement of sweeping reforms that will come into effect from September 22, 2025. Market participants viewed the tax restructuring as a significant boost to consumption demand and business sentiment.
The broader market participation was evident with 1,926 shares advancing compared to just 439 declining stocks, while 126 shares remained unchanged in the opening session. This strong breadth indicated broad-based optimism across various market segments.
GST Reforms Drive Sectoral Rally
The GST Council’s decision to simplify the tax structure from four slabs to just two main rates of 5% and 18% created immediate winners across multiple sectors.
Auto stocks led the rally*, with Nifty Auto surging 2.35% in early trading, followed by FMCG stocks which gained 1.52%, and Realty stocks advancing 1%.
Mahindra & Mahindra emerged as the top performer, jumping 6.57% after the GST rate cuts on vehicles. Other auto giants also participated in the rally, with Eicher Motors gaining 2.53%, Balkrishna Industries up 2.05%, Tata Motors advancing 1.76%, and TVS Motors climbing 1.68%.
The FMCG sector also witnessed strong gains as numerous daily essentials moved to lower tax brackets. Major FMCG players benefited from the decision to exempt paneer and various Indian breads from GST, while packaged foods including namkeen, sauces, pasta, instant noodles, coffee, butter, ghee, and cornflakes will be taxed at reduced rates.
Insurance Sector Gets Major Relief
One of the most significant announcements was the complete exemption of individual life and health insurance from GST, providing substantial relief to the insurance sector and consumers. This move is expected to boost insurance penetration and make coverage more affordable for Indian families.
Key Market Gainers and Performance
Among the Sensex constituents, Bajaj Finance, HUL, Grasim Industries, Bajaj Finserv, and Trent emerged as major gainers in the opening session. The positive sentiment was also reflected in broader indices, with about 1,926 shares advancing against 439 declining stocks.
However, some heavyweight stocks faced selling pressure, with NTPC, Reliance Industries, Hindalco Industries, HCL Technologies, and ONGC among the notable losers in early trading.
Global Cues Support Indian Markets
The positive domestic sentiment was complemented by favorable global cues. Asian markets traded higher on Thursday, with Japan’s Nikkei 225 up 0.57%, South Korea’s Kospi gaining 0.45%, and other regional indices showing positive momentum following Wall Street’s tech-driven rally overnight.
Revenue Impact and Economic Implications
The GST Council’s rate rationalization is expected to result in a revenue loss of approximately Rs 48,000 crore to Rs 93,000 crore, according to different estimates. However, economists believe the consumption boost from lower rates will offset this impact through increased economic activity and tax compliance.
The reforms are particularly significant as they address long-standing issues in sectors like textiles, fertilizer, renewable energy, automotive, handicrafts, agriculture, health, and insurance through the elimination of duty inversion problems.
Technical Outlook and Market Strategy
From a technical perspective, market analysts noted that the Nifty formed a bullish candle with strong buying support at lower levels. Immediate resistance is seen at 24,850-24,900 levels, while support is placed at 24,600 and stronger support near 24,500.
The Bank Nifty showed resilience by sustaining above the 54,000 mark, with immediate support at 53,700 and resistance at 54,300. A decisive break above these levels could trigger fresh buying momentum across financial stocks.
Sector-Wise Impact Analysis
Automobile Sector: The removal of compensation cess on small cars, two-wheelers, three-wheelers, and commercial vehicles is expected to make vehicles more affordable, potentially boosting sales during the upcoming festive season.
FMCG Sector: With numerous daily essentials moving to lower tax brackets, FMCG companies are expected to benefit from increased consumption demand. Items like hair oil, toilet soap, toothbrushes, cycles, and household articles will now attract just 5% GST.
Real Estate: The reduction in cement GST from 28% to 18% is viewed as a major positive for the infrastructure and real estate sectors, potentially reducing construction costs.
Market Outlook and Investment Implications
The GST rate cuts represent the most comprehensive tax reform since the introduction of GST in 2017. Market participants view this as a significant step toward simplifying India’s tax structure and boosting economic growth through enhanced consumption demand.
With the festive season approaching and these rate cuts taking effect from September 22, companies across FMCG, auto, insurance, and consumer durables sectors are expected to benefit from increased consumer spending and improved demand dynamics.
The positive market opening suggests that investors are optimistic about the long-term implications of these reforms, viewing them as a catalyst for sustainable economic growth and improved corporate earnings across multiple sectors.
