Benchmarks end higher as GST cuts lift sentiment; broader mkt see profit booking

The frontline equity benchmarks ended with modest gains on Thursday after the government unveiled sweeping tax cuts under a major Goods and Services Tax (GST) overhaul. The move, designed to boost consumer spending ahead of the festive season and cushion the impact of high U.S. tariffs, lifted investor sentiment.

The Nifty closed above the 24,700 mark, with auto and FMCG shares leading the advance, while PSU banks and energy stocks lagged. Market watchers noted that enthusiasm over the GST reforms overshadowed the impact of the weekly expiry of the Sensex derivatives contracts.

In contrast, small- and mid-cap stocks came under pressure, snapping their recent rally as traders booked profits amid expiry-driven volatility. Analysts said the decline reflects short-term unwinding rather than a shift in the broader structural trend, which remains supported by policy tailwinds.

The S&P BSE Sensex added 150.30 points, or 0.19%, to close at 80,718.01, while the Nifty 50 advanced 19.25 points, or 0.08%, to 24,734.30. Over two consecutive sessions, the Sensex has risen 0.69% and the Nifty has gained 0.62%.

Mahindra & Mahindra (up 5.96%), Bajaj Finance (up 4.28%) and HDFC Bank (up 0.78%) were among the top contributors supporting the Nifty?s gains.

The broader market underperformed the frontline indices. The S&P BSE Mid-Cap index shed 0.60% and the S&P BSE Small-Cap index fell 0.60%.

The market breadth was negative. On the BSE, 1809 shares rose and 2325 shares fell. A total of 157 shares were unchanged.

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, fell 0.70% to 10.85.

GST 2.0:

The GST Council approved the significant rate cuts on several essential items. Effective from September 22nd, the new rates aim to boost consumption by shifting to a two-slab structure of 5% and 18%, abolishing the 12% and 28% rates. A special 40% GST slab has been introduced for super luxury and sin goods.

In a major relief to the automobile and two-wheeler sector, GST on small cars and motorcycles with engine capacity up to 350cc has been reduced from 28% to 18%, a move aimed at boosting demand in the mass mobility segment. Additionally, parts and accessories of motorcycles up to 350cc will now attract 18% GST instead of 28%.

On the other hand, the levy on premium motorcycles exceeding 350cc has been sharply raised from 28% to 40%, making high-end bikes costlier.

The GST Council exempted individual life and health insurance policies from the 18% Goods and Services Tax (GST).

Several fast-moving consumer goods (FMCG) currently taxed at 12% or 18% will now fall under the 5% bracket. Further, GST on tractors (except road tractors for semi-trailers above 1800cc) has been redcued to 5% from 12%. For road tractors with engines above 1800cc, the tax was lowered to 18% from 28%. Additionally, GST on tractor tyres and parts was slashed from 18% to 5%.

In education segment, the council reduced GST on pencils, crayons, pastels, drawing charcoal, chalk sticks, and tailor?s chalk from 12% to nil. Exercise books, graph books, laboratory notebooks, and notebooks too have been exempted from GST, compared with 12% earlier. Additionally, boxes, pouches, wallets, and writing compendiums of paper or paperboard containing assorted stationery will now attract 5% GST instead of 12%.

Numbers to Track:

The yield on India's 10-year benchmark federal paper shed 0.44% to 6.512 from the previous close of 6.514.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 88.1650 compared with its close of 88.0200 during the previous trading session.

MCX Gold futures for 3 October 2025 settlement fell 0.76% to Rs 106,377.

The US Dollar Index (DXY), which tracks the greenback's value against a basket of currencies, was up 0.07% to 98.15.

The United States 10-year bond yield declined 0.45% to 4.192.

In the commodities market, Brent crude for November 2025 settlement dropped 79 cents or 1.17% to $66.78 a barrel.

Global Markets:

Shares in Europe and Asia were mixed on Thursday as investors weighed the potential impact of U.S. President Donald Trump's trade tariffs.

Global bond markets will continue to be in focus with long-dated borrowing costs around the world under pressure. The U.S. 30-year Treasury yield nudged above 5% on Wednesday morning for the first time since July after a court ruled that most of the Trump administration?s tariffs are illegal, raising questions over the future of tariff revenues.

Overnight on Wall Street, U.S equities closed mixed. The S&P 500 rose Wednesday, boosted by tech shares after a federal court decision in an Alphabet antitrust case fueled optimism that the tech giants would be able to weather regulatory threats.

Nasdaq Composite gained 1.03%, while the S&P 500 climbed 0.51%. The Dow Jones Industrial Average shed 0.05%.

Traders awaited for Nonfarm payrolls data due on Friday.

Stocks in Spotlight:

Mahindra & Mahindra soared 5.96% after the GST Council reduced GST on tractors (except road tractors for semi-trailers above 1800cc) to 5% from 12%. For road tractors with engines above 1800cc, the tax was lowered to 18% from 28%. Additionally, GST on tractor tyres and parts was slashed from 18% to 5%.

Force Motors fell 8.52%. The company said that its domestic sales jumped 6.60% to 2,295 units in August 2025, as against 2,153 units sold in August 2024.

Footwear stocks rallied on Thursday after the GST Council reduced the GST rate on footwear priced up to Rs 2,500 per pair from 12% to 5%. The move is aimed at making shoes more affordable and stimulating demand, particularly in the mass market segment.

Bata India surged 6.97%, Liberty Shoes jumped 1.51% and Lehar Footwear advanced 2.14% following the announcement.

Paisalo Digital jumped 3.03% after the company?s board approved raising Rs 50 crore through issuance of debt securities via private placement.

Angel One shed 0.42%. The firm announced that its client base jumped 26% to 33.57 million in August 2025, compared with 26.65 million in August 2024.

Asian Hotels (North) rose 1.67% after the company announced that Arjun Raghavendra Murlidharan has been appointed as the chairman of the board of directors, effective from 13 September 2025.

CFF Fluid Control rose 0.67%. The company announced that it had received a Letter of Intent (LOI) from the Indian Navy?s Material Organisation for the supply of various equipment under the P75 submarine project.

GHV Infra Projects rose 0.76% after the firm has received a letter of intent (LoI) worth Rs 120 crore from GHV (India) for engineering and construction work for the integrated redevelopment of a South Eastern Railway station in Jharkhand.

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