Nifty 50 jumps 1% near 25,000 after Govt announces GST rate cuts

On Thursday, the Nifty 50 surged by 1.07 percent higher touching a day’s high of 24,980.75 from its previous closing of 24,715.05, attributing to widespread optimism after the Indian government’s announcement of major Goods and Services Tax (GST) rate cuts across key sectors. This reform introduces a streamlined two-tier GST structure which is of 5 percent and 18 percent which is set to take effect from September 22, 2025, delivering direct benefits to leading listed companies in FMCG, auto, consumer durables, cement, insurance, agriculture, and healthcare sectors. Below, sector-wise GST changes and likely beneficiary stocks are detailed based on the latest news.

FMCG Sector

GST rates for many daily-use consumer packaged goods, previously 12 percent or 18 percent, now stand slashed to 5 percent for items such as soaps, shampoos, toothpaste, and edible products like namkeen, sauces, chocolates, butter, and ghee. This price reduction can boost volume growth, benefitting listed FMCG firms such as Britannia Industries, Nestle India, Dabur India, Colgate-Palmolive (India), Hindustan Unilever (HUL), Tata Consumer Products, and Bikaji Foods International. Lower prices are expected to improve demand, potentially increasing revenue and margins for these companies.

Auto Sector

The auto sector is among the biggest winners, with major GST rate cuts on entry-level cars, two-wheelers below 350cc, motorcycles, and commercial vehicles, dropping from 28 percent to 18 percent. Even mid-to-high-end SUVs now see rates cut from 28 percent GST + 17 to 22 percent Cess varies to 40 percent, while electric vehicles retain the low 5 percent GST. Stocks set to benefit include Maruti Suzuki India, Tata Motors, Hero MotoCorp, Mahindra & Mahindra, Bajaj Auto, and TVS Motor Company. Ancillary auto companies and auto parts manufacturers are also poised for increased sales, due to greater affordability and revived consumer sentiment.

Consumer Durables

GST on appliances such as air conditioners, televisions above 32 inches, dishwashers, and many other household electronics has been reduced to 18 percent from 28 percent. This can likely trigger demand growth, benefitting stocks like Voltas, Havells India, Whirlpool of India, and PG Electroplast. Lower taxes on kitchenware and tableware also support leading manufacturers in the listed space.

Cement and Building Materials

GST for cement and other construction materials is reduced from 28 percent to 18 percent, with developers and builders expected to see improved margins and lower costs. This promotes housing and infrastructure demand, directly aiding stocks such as UltraTech Cement, Ambuja Cement, Shree Cement, and ACC. This favorably impacts the broader real estate, housing finance companies, and construction sectors, providing material cost relief to developers.

Insurance and Financial Services

Insurance premiums for individual policies now attract zero GST, having been completely exempted, while health and life insurance also benefit from substantial reductions. This tax relief is projected to boost the penetration of products from listed insurers like HDFC Life, SBI Life, ICICI Prudential Life, and Max Life Insurance. The move lowers costs for consumers, likely leading to higher policy purchases and improved premium collections for these companies. Insurance companies can pass on the tax benefits to the consumers to attract more premiums.

Agriculture

GST on all agricultural equipment and road tractors, previously at 28 and 12 percent, is now brought down to 18 and 5 percent, respectively. This helps make farm tools and machinery more affordable, benefiting listed companies such as Mahindra & Mahindra, Escorts Kubota, and VST Tillers Tractors, which produce tractors and farm implements. With lower procurement costs, farmers can invest more in mechanization.

Healthcare and Pharmaceuticals

Over 30 life-saving drugs and medicines have witnessed complete GST exemption, moving from 12 percent (and 5 percent) to 0 percent. Healthcare companies like Sun Pharma, Cipla, Dr. Reddy’s Laboratories, and Abbott India are likely beneficiaries as drug affordability improves, improving access for patients and sales prospects for pharmaceutical firms. Cancer drugs, rare disease treatments, and several chronic condition therapies are included in this exemption.

Textiles and Labour-Intensive Industries

GST reductions to 5 percent on products such as handicrafts, garments, footwear under Rs 1,000, stone blocks, and leather goods directly support the listed textile and apparel companies. Stocks such as Raymond Lifestyle, Page Industries, and Aditya Birla Fashion can benefit from improved competitiveness, especially in light of adverse external tariffs and rising global demand.

Market Sentiment and Broad Impact

Analysts see GST rate cuts as a critical catalyst for consumption growth. The simplified GST structure can support long-term investment, with brokerages like CLSA projecting incremental GDP growth of up to 30 basis points and expecting continued gains for consumption-oriented stocks, as per sources. Long-term prospects are bright given the broad-based tax relief.

In summary, the GST rate overhaul ushers in broad benefits, with listed stocks in FMCG, auto, consumer durables, cement, insurance, agriculture, healthcare, and textiles all positioned to gain market momentum and improved financial performance due to enhanced affordability and renewed consumer demand.