Nifty trades above 24,800 level; financial services shares advance

The key equity indices continued to trade with decent gains in the mid-morning trade after the government cut taxes on several goods as part of a major GST overhaul. The move aims to boost consumer spending ahead of the festive season and ease the impact of high U.S. tariffs, among other factors.

The Nifty traded above the 24,800 level. Financial Services stocks extended their gains for the second consecutive trading session.

At 11:30 ST, the barometer index, the S&P BSE Sensex, rallied 408.66 points or 0.51% to 80,980.43. The Nifty 50 index added 114.95 points or 0.55% to 24,827.90.

In the broader market, the S&P BSE Mid-Cap index shed 0.09% and the S&P BSE Small-Cap index fell 0.09%.

The market breadth was positive. On the BSE, 2,056 shares rose and 1,820 shares fell. A total of 222 shares were unchanged.

GST Reforms:

The GST Council approved the significant rate cuts on several essential items. Effective from September 22nd, the new rates aim to boost consumption by shifting to a two-slab structure of 5% and 18%, abolishing the 12% and 28% rates. A special 40% GST slab has been introduced for super luxury and sin goods.

In a major relief to the automobile and two-wheeler sector, GST on small cars and motorcycles with engine capacity up to 350cc has been reduced from 28% to 18%, a move aimed at boosting demand in the mass mobility segment. Additionally, parts and accessories of motorcycles up to 350cc will now attract 18% GST instead of 28%.

On the other hand, the levy on premium motorcycles exceeding 350cc has been sharply raised from 28% to 40%, making high-end bikes costlier.

The GST Council exempted individual life and health insurance policies from the 18% Goods and Services Tax (GST).

Several fast-moving consumer goods (FMCG) currently taxed at 12% or 18% will now fall under the 5% bracket. Further, GST on tractors (except road tractors for semi-trailers above 1800cc) has been redcued to 5% from 12%. For road tractors with engines above 1800cc, the tax was lowered to 18% from 28%. Additionally, GST on tractor tyres and parts was slashed from 18% to 5%.

In education segment, the council reduced GST on pencils, crayons, pastels, drawing charcoal, chalk sticks, and tailors chalk from 12% to nil. Exercise books, graph books, laboratory notebooks, and notebooks too have been exempted from GST, compared with 12% earlier. Additionally, boxes, pouches, wallets, and writing compendiums of paper or paperboard containing assorted stationery will now attract 5% GST instead of 12%.

Buzzing Index:

The Nifty Financial Services index rose 0.70% to 25,913.20. The index added 1.33% in the two trading sessions.

Bajaj Finance (up 5.36%), Bajaj Finserv (up 2.68%), ICICI Lombard General Insurance Company (up 2.15%), Cholamandalam Investment & Finance Company (up 1.56%), ICICI Prudential Life Insurance Company (up 1.13%), SBI Cards & Payment Services (up 1.11%), Muthoot Finance (up 0.92%), ICICI Bank (up 0.89%), HDFC Bank (up 0.57%) and HDFC Life Insurance Company (up 0.46%) added.

On the other hand, REC (down 0.6%), Jio Financial Services (down 0.48%) and Power Finance Corporation (down 0.43%) edged lower.

Stocks in Spotlight:

Axiscades Technologies rose 0.23%. The company said its subsidiary, Mistral Solutions, has secured contracts for the development of production line testing equipment for global contract manufacturers supporting one of two hyperscaler clients.

Highway Infrastructure rose 0.36%. The company announced that it has received a Letter of Acceptance (LOA) worth Rs 18.96 crore from the National Highways Authority of India (NHAI) for toll collection and maintenance services on a key expressway project in Rajasthan.

Global Markets:

Asian market traded mixed on Thursday as investors awaiting Australias household spending data for July later in the day

Global bond markets will continue to be in focus with long-dated borrowing costs around the world under pressure. The U.S. 30-year Treasury yield nudged above 5% on Wednesday morning for the first time since July after a court ruled that most of the Trump administrations tariffs are illegal, raising questions over the future of tariff revenues.

Overnight on Wall Street, U.S equities closed mixed. The S&P 500 rose Wednesday, boosted by tech shares after a federal court decision in an Alphabet antitrust case fueled optimism that the tech giants would be able to weather regulatory threats.

Nasdaq Composite gained 1.03%, while the S&P 500 climbed 0.51%. The Dow Jones Industrial Average shed 0.05%.

Traders awaited for Nonfarm payrolls data due on Friday.

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