Markets log best week in 2 months as GST revamp boosts growth hopes

Benchmark indices end the week higher, posting their best gains in over two months, with optimism from GST reforms on everyday goods

The benchmark indices ended little changed on Friday but posted their best weekly gain in over two months, buoyed by optimism that cuts to the goods and services tax (GST) on everyday goods will spur economic growth. 

The Nifty rose 7 points, or 0.03 per cent, to close at 24,741, climbing 1.3 per cent for the week. The Sensex fell 7 points to settle at 80,711, but ended the week 1.13 per cent higher. This was the best week for both indices since June 29, and only their third weekly gain since then. 

This week’s gain came after the GST Council, which comprises Union and state finance ministers, lowered rates and cut taxes on 

 

items such as food products, automobiles, consumer durables, and individual insurance purchases. 

Foreign portfolio investors (FPIs) sold shares worth about ₹1,305 crore on Friday and ₹5,667 crore during the week.

 

Domestic institutional investors, on the other hand, infused around ₹1,821 crore on Friday.

 

“While external headwinds from global trade uncertainties and tariff hikes remain a key risk, the combination of a simplified GST framework and positive domestic macros would underpin market momentum in the near term,” said Siddhartha Khemka, head of research (wealth management) at Motilal Oswal Financial Services.

 

Auto stocks were the best performers, with the sector index gaining more than 5 per cent during the week, after tax rates on smaller cars, motorcycles, buses, and trucks were cut to 18 per cent from 28 per cent.

 

The broader markets -- Nifty Smallcap 100 and Nifty Midcap 100 -- gained about 2.5 per cent each.

 

“The GST rate cut, along with supportive factors such as a good monsoon and benign inflation, sets the stage for stronger demand momentum as we head into the festival season. While the market awaits clarity on the trade front, these reforms represent a strong step towards reviving investor sentiment,” said Mahesh Patil, chief investment officer at Aditya Birla Sun Life AMC.

 

Among the top Nifty performers was Mahindra & Mahindra, which surged over 11 per cent, its best week in 15 months. All sectoral indices posted gains during the week, except the Nifty IT index, which declined 1.6 per cent.

 

The Nifty IT index slipped 1.44 per cent on Friday amid speculation that the US may impose tariffs on Indian IT services, triggering panic selling and dragging the rupee to a record low.

 

The Nifty Metal index climbed nearly 6 per cent during the week on optimism that domestic steelmakers will benefit from China’s planned capacity cuts.

 

The Nifty FMCG and Consumer Durables indices rose 2.6 per cent and 3.2 per cent, respectively, supported by GST relief. However, the FMCG index fell 1.42 per cent on Friday amid profit-taking. Shares of ITC declined nearly 2 per cent on reports that the government may impose a fresh levy on tobacco products once the 40 per cent GST compensation cess expires.