Markets extend rally on GST tax cuts, investors gain Rs 4 lakh crore
Initial gains on GST-driven consumption under challenge as tariff concerns continue to weigh on investor sentiment
Indian equity markets opened on a strong footing on Wednesday, 3 September, buoyed by investor optimism following the Goods and Services Tax (GST) Council’s approval of sweeping tax reforms.
Stocks in consumer durables, automobiles, and FMCG sectors initially led the rally, with Mahindra & Mahindra surging over 7.5 per cent, while Bajaj Finance, Hindustan Unilever, Bajaj Finserv, ITC, Tata Motors, and UltraTech Cement also recorded gains.
However, despite this early enthusiasm profit booking too set in, pushing the broader markets into negative territory briefly. Analysts cautioned that while the GST overhaul, which reduces tax slabs to 5 per cent and 18 per cent, could boost consumption ahead of the festive season, the market’s focus remains on underlying risks, particularly tariff-related concerns.
VK Vijayakumar, chief investment strategist at Geojit Investments, noted, “The potential boost to consumption is significant, but after the initial enthusiasm, tariff issues will continue to haunt the market.”
Similarly, Santosh Meena, head of research at Swastika Investmart, highlighted that tax cuts were largely priced in and the long-term impact on government revenue and economic growth will influence market sentiment.
Global cues added to the uncertainty. While South Korea’s Kospi and Japan’s Nikkei advanced, Chinese equities continued to decline, with the Shanghai Composite falling 1.6 per cent amid reports of potential regulatory cooling measures. Weaker-than-expected US job openings and mixed Federal Reserve commentary further contributed to a cautious trading environment.
Foreign Institutional Investors (FIIs) continued to withdraw capital, offloading equities worth Rs 1,666.46 crore, even as Domestic Institutional Investors (DIIs) bought Rs 2,495.33 crore of stocks. Analysts noted that while DIIs’ stake in listed firms is near record highs, ongoing foreign outflows and concerns over tariffs and corporate earnings are likely to keep markets under pressure.
Technically, the Nifty is forming a double bottom in the 24,350–24,500 range. A break above 24,770 could signal a move toward 25,000, but the broader trend will be influenced by global developments and domestic tariff uncertainties.