Indian Benchmark Indices Start on a Bright Note on Tax Cut Boost

Market Update at 10:20 AM: Indian shares opened higher on Thursday, rising more than 1 per cent, after the Goods and Services Tax (GST) Council announced a major tax reform aimed at reducing consumption taxes. The move comes as the country looks to cushion the impact of steep U.S. tariffs and support economic momentum.

At 9:15 a.m. IST, the NSE Nifty 50 was up 1.08 per cent at 24,980.75, while the BSE Sensex advanced 1.1 per cent to 81,456.67. The reform, which shifts the existing four GST slabs into a two-rate structure, will take effect from September 22. Everyday essentials will fall under lower tax brackets, potentially improving consumer spending power.

All 13 major sectoral indices recorded gains in early trade. The auto index surged 3.6 per cent, while consumer-focused stocks gained 2.7 per cent, providing strong support to the benchmarks. Analysts believe that such tax cuts could also influence the performance of Small-Cap and Mid-Cap companies in the consumer and auto space, while Large-Cap firms may benefit from stronger demand momentum.

Pre-Market Update at 7:45 AM: On Thursday, September 4, benchmark indices Sensex and Nifty 50 are expected to witness a gap-up opening after the Goods and Services Tax (GST) Council approved major reforms on Wednesday. The reforms include significant rate cuts on essential goods and some services, marking the biggest restructuring since GST was first introduced.

Finance Minister Nirmala Sitharaman announced that from September 22, 2025, a new goods and services tax regime will come into effect with three slabs — 5 per cent, 18 per cent, and 40 per cent. This reform will lead to GST rate reductions on 396 items, aimed at easing the cost burden on the common man. Market participants are also expecting this change to benefit consumption-oriented sectors, potentially driving demand for large-cap and mid-cap companies.

On Wednesday, September 3, Foreign Institutional Investors (FIIs) sold equities worth Rs 1,666.46 crore, while Domestic Institutional Investors (DIIs) turned net buyers, purchasing shares worth Rs 2,495.33 crore. These flows played a role in supporting market sentiment after the GST announcement.

Indian equities closed higher on Wednesday with strong participation across the board. The Sensex ended 410 points higher at 80,567.71, up 0.51 per cent, while the Nifty 50 added 135 points or 0.55 per cent to settle at 24,715.05. Broader markets also advanced, with the BSE Midcap index gaining 0.63 per cent and the Small-cap index rising 0.90 per cent.

Overnight in the U.S., the Nasdaq Composite advanced 1.03 per cent to 21,497.73, while the S&P 500 gained 0.51 per cent to close at 6,448.26. However, the Dow Jones Industrial Average slipped 0.05 per cent to 45,271.23. Higher U.S. bond yields continued to be in focus, with the 30-year Treasury yield crossing 5 per cent for the first time since July.

Gold prices held steady in Asian trade at USD 3,588.52/oz, supported by expectations of a Federal Reserve rate cut. The U.S. dollar index weakened by 0.2 per cent against major currencies. Meanwhile, crude oil extended losses, with WTI trading near USD 63 per barrel and Brent crude around USD 67 per barrel on concerns over OPEC+ supply increases.

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Disclaimer: The article is for informational purposes only and not investment advice.