The mood was celebratory for the Indian stock markets as benchmark equity indices Sensex and Nifty surged in early trade on Thursday after the GST Council approved a complete overhaul of the eight-year-old Goods and Services Tax regime.
The 30-share BSE Sensex jumped 888.96 points to 81,456.67 in opening trade, and the 50-share NSE Nifty surged 265.7 points to 24,980.75.
The most significant was the jump in auto stocks on Thursday morning, with Mahindra & Mahindra climbing nearly 8 per cent, as small cars and entry-level bikes are set to get cheaper with the GST Council’s new two-tier tax policy.
Common use items from roti/paratha to hair oil, ice creams and TVs will also cost less, while tax incidence on personal health and life insurance will be brought down to nil after the all-powerful GST Council on Wednesday night announced the latest tax slab structure.
The new slabs are now limited 5 per cent and 18 per cent, effective from September 22, the first day of Navaratri.
From the Sensex firms, other gainers were Bajaj Finance, Hindustan Unilever, Bajaj Finserv, ITC, Tata Motors and UltraTech Cement.
However, Eternal, Tata Steel, NTPC and HCL Tech were among the laggards.
Also Read: GST Council meet Day 1: New tax likely to be levied from Sept 22
Trade analysts commended the revolutionary GST reforms for the markets surge, saying the changes are better than what was being expected.
"The revolutionary GST reform has come better-than-expected benefitting a wide spectrum of sectors. The ultimate beneficiary is the Indian consumer who will benefit from lower prices. The potential big boost to consumption in an economy that is already in growth momentum will be big and may surprise on the upside," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
He cautioned, however, that after the initial enthusiasm tempers down, tariff issues will continue to haunt the market.
In Asian markets, South Korea's Kospi and Japan's Nikkei 225 index traded in positive territory while Shanghai's SSE Composite index and Hong Kong's Hang Seng quoted lower.
US markets ended mostly higher on Wednesday.
Foreign Institutional Investors (FIIs) offloaded equities worth ₹1,666.46 crore on Wednesday, while Domestic Institutional Investors (DIIs) bought stocks worth ₹2,495.33 crore, according to exchange data.
Global oil benchmark Brent crude dipped 0.56 per cent to USD 67.22 a barrel.
On Wednesday, the Sensex had jumped 409.83 points or 0.51 per cent to settle at 80,567.71, and the Nifty climbed 135.45 points or 0.55 per cent to 24,715.05.
Other auto shares that saw a jump on Thursday morning are Eicher Motors, which surged 5.39 per cent, TVS Motor Company, that climbed 4.20 per cent, and Hero MotoCorp, which went up by 3.56 per cent on the BSE.
The stock of MRF rallied 3.39 per cent, Bajaj Auto edged higher by 2.56 per cent, Apollo Tyres 2.49 per cent and Tata Motors went up by 2 per cent.
The BSE auto index climbed 1.70 per cent to 58,712.10.
Also Read: New GST regime from Sept 22: 5pc, 18pc continue; 40pc on luxury
Investors are seeing the simplified tax structure as “growth reforms” and not just tax reforms, since they aim at consumption-infused growth of the economy.
A report by Motilal Oswal Financial Services says, "Given the wide-ranging effect of the measures, many domestic-focused stocks are likely to benefit. Some of the key names include: Maruti, M&M, Ashok Leyland, Britannia, Ultratech, JK Cement, Havells, Voltas, Amber, Metro, Trent, LemonTree, Indian Hotels, Niva Bupa, HDFC Life, IGL, Acme Solar, Suzlon, Swiggy, Delhivery, ICICI Bank, HDFC Bank, Bajaj Finance, Shriram Finance.”
Additionally, 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 would move to the 18 per cent rate from the current 28 per cent.
Motorcycles up to 350 cc would be taxed at a lower GST of 18 per cent against 28 per cent currently.
All automobiles above 1,200 cc and longer than 4,000 mm as well as motorcycles above 350 cc and racing cars will be charged with a 40 per cent levy.
Small hybrid cars will also benefit, while EVs will continue to be charged at 5 per cent.
"All the revised GST rates are applicable from 22nd Sep’25 onwards, the day marked with the first day of the Navaratri festival. This reform aims to simplify the GST rates, ease compliance, create higher disposable income and stimulate long-term economic revival," according to a report by Axis Securities.
Some of the key sectors that could be key beneficiaries are: insurance, consumer durable, building materials, automobiles, retail, cement, FMCG, and real estate, it added.
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