The Indian equity market opened sharply higher on Thursday, buoyed by the sweeping Goods and Services Tax (GST) reforms announced by the Union government.
The Sensex jumped nearly 700 points, crossing 81,000 around 9:30 AM, while the Nifty gained 156.65 points, trading at 24,871.70.
GST Overhaul Details
On Wednesday, Union Finance Minister Nirmala Sitharaman unveiled a major revamp of the GST system, which had been in place since 2017.
Key highlights include:
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Simplification of slabs: The earlier four slabs of 5%, 12%, 18%, and 28% have been reduced to just two – 5% and 18%.
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Special 40% slab: Applicable for luxury and sin goods like high-end cars, tobacco, and cigarettes.
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Effective date: New rates take effect on September 22, except for pan masala, gutkha, and other tobacco products which will be addressed later.
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Coverage: Cuts apply to household essentials, medicines, small cars, appliances, tractors, and cement, impacting daily life and lowering costs.
Market Experts Predict Bullish Momentum
Banking and market expert Ajay Bagga told ANI that the GST cuts, combined with strong macroeconomic indicators, could trigger a major pre-Diwali rally.
“We may take out the September 2024 all-time highs on the back of these positive triggers. Strong GDP numbers, robust PMI readings, income tax cuts, government spending, rural demand and a good monsoon — all are aligning. The GST cut will boost consumption and formalisation. If US President Trump rolls back punitive tariffs, we could see a remarkable Santa Claus rally in Indian markets,” Bagga said.
Global Trade Context
Bagga’s comments referenced US President Donald Trump’s recent tariffs — a total 50% levy on Indian goods following India’s purchase of Russian oil. Analysts suggest that any rollback of these tariffs would further support Indian markets and boost investor confidence.
