Domestic equity market indices, Sensex and Nifty, gained one per cent on Monday, as proposed Goods and Services Tax (GST) reforms and an upgrade on India’s credit rating by S&P Global ratings boosted investor sentiment.
The BSE’s Sensex rose 0.84 per cent, or 676.09 points, to end at 81,273.75. The broader Nifty 50 climbed 1 per cent, or 245.65 points, to finish at 24,876.95. During intraday trades, Sensex and Nifty touched highs of 81,765.77 and 25,022, respectively, before witnessing profit booking at higher levels.
The rally in the market was driven by gains in auto and consumer durables stocks in response to the proposed review in GST rates. Among the NSE companies, firms that gained the most included Maruti Suzuki India (8.92 per cent), Hero Motocorp (5.99 per cent), Nestle India (5.23 per cent), Bajaj Finance (5.06 per cent) and Bajaj Auto (4.61 per cent).
“Markets staged a strong rally on Monday and ended with gains of a percent. The positive sentiment was driven by GST reform proposals, easing concerns over crude oil prices, and a sovereign rating upgrade, which together lifted investor confidence,” said Ajit Mishra, senior vice president (research), Religare Broking Ltd.
In his Independence Day speech on August 15, Prime Minister Narendra Modi announced next-gen GST reforms before Diwali to ease burden on consumers and small businesses. Under the proposed tax structure, there will be two-slab structure – 5 per cent and 18 per cent.
“We think the proposed new GST regime will likely have meaningful impacts on growth, fiscal balance, and CPI inflation, with implications for monetary policy,” said Upasana Chachra, Chief India Economist, Morgan Stanley.
In the near term, there could be some impact on volume growth as consumers potentially defer their spending until clarity emerges on the new GST regime. However, once new GST rates come into force, there should be a recouping of potential deferred demand alongside support through improved affordability, she said.
Story continues below this ad
S&P Global Ratings’ upgrade of India’s long-term sovereign credit rating to ‘BBB’ from ‘BBB-‘, with a stable outlook, also resulted in higher buying in the market.
Additionally, the recent conclusion of the US and Russia summit, without any escalation in geopolitical tensions, also helped ease investor anxiety, said Vinod Nair, Head of Research, Geojit Investments Limited.
Sector-wise, all major indices, barring IT (information technology), contributed to the up move, with auto, realty, and metal leading the gains. The Nifty Auto gained 4.18 per cent and Nifty Consumer Durables rose 3.38 per cent.
Broader markets also joined the rally, as Nifty Midcap 100 and Nifty Smallcap 100 rallied 1.08 per cent and 1.38 per cent, respectively.
© The Indian Express Pvt Ltd
.