The Indian stock market looks set for a strong start on Thursday with Gift Nifty trading higher, fresh GST rate cuts across hundreds of items, and a buoyant Wall Street rally boosting Asian peers.
Gift Nifty Signals a Strong Start
Gift Nifty traded near the 24,960 mark early Thursday, pointing to a premium of about 124 points from the Nifty futures’ last close. That’s a clear sign of positive momentum heading into the trading day.
For traders, this premium often acts like an early weather forecast. And right now, it suggests sunshine. Investors are likely to carry forward Wednesday’s optimism when both Sensex and Nifty ended higher, thanks to a surge in metals and banking counters.
One dealer at a large brokerage said the sentiment feels “constructive” for the short term. “We are likely to open gap up, but sustaining above 25,000 on the Nifty is what everyone’s watching,” he noted.
GST Council Approves Sweeping Rate Cuts
Late Wednesday evening, the GST Council greenlit rate cuts on 396 items. That’s not a small tweak—it’s a massive rejig of consumer pricing that could ripple across several sectors.
For context, the biggest beneficiaries are likely to be in autos, cement, hospitality, and consumer durables. Lower tax rates could free up purchasing power, fuel demand, and possibly nudge inflation lower.
The market has already been anticipating such moves, which explains the strong rally in cyclical stocks. Traders say the Council’s decision could be a medium-term driver, especially for consumer-facing companies.
And here’s the tricky part: while rate cuts excite equity investors, they also reduce government revenues. That means the fiscal math will be under the microscope in coming weeks.
Global Markets Provide a Tailwind
Overnight cues from Wall Street came in hot. Tech stocks led a rally that pushed both the S&P 500 and Nasdaq Composite firmly higher.
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Japan’s Nikkei 225 gained 0.57% in early trade.
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South Korea’s Kospi added 0.45%, while the Kosdaq rose nearly double that at 0.84%.
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Even Hong Kong, often weighed by China growth fears, opened firmer.
This alignment matters. Indian equities are rarely insulated from global risk appetite. And when investors in Asia see Wall Street’s risk-taking mood, the optimism trickles in.
Metals and Banks Keep the Rally Alive
The Nifty Metal index stood out with a hefty 3.1% surge. This wasn’t just domestic cheer—it was also linked to China signaling steel output cuts for 2025-26. A weaker U.S. dollar added fuel, making commodities more attractive.
Banking stocks also did the heavy lifting. With liquidity conditions stable and credit growth holding, lenders saw decent buying. The broader market wasn’t left behind either—Midcap and Smallcap indices posted gains of 0.7% and 0.9% respectively.
One sentence sums it up: risk appetite looked alive and well.
Foreign Flows Still a Concern
The elephant in the room is foreign money. Foreign Institutional Investors (FIIs) sold equities worth ₹1,159 crore on Tuesday. That kind of persistent outflow keeps traders nervous, even on strong days.
Domestic Institutional Investors (DIIs), though, have been the balancing act—buying into dips and helping indices stay afloat. Without that cushion, the FII selling would hurt far more.
Here’s how flows stacked up recently:
| Date | FII Flows (₹ crore) | DII Flows (₹ crore) |
|---|---|---|
| Aug 30 | -1,243 | +1,005 |
| Sept 2 | -1,159 | +1,214 |
| Sept 3 | -982 | +1,048 |
The tug-of-war is obvious, but it’s the domestic funds who are currently tipping the balance.
Sectors to Watch Today
Market analysts point to four pockets where action may be concentrated:
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Autos: Benefit directly from GST cuts, especially on two-wheelers and small cars.
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Hotels: Lower GST could boost travel demand in peak festive season.
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Cement: Rate rationalization might aid housing and infra-linked demand.
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Consumer durables: White goods and appliances could see sentiment turn sharply positive.
One strategist put it simply: “The GST Council has effectively handed consumption plays a Diwali gift two months early.”
Macro Picture Still Cloudy
Despite the buoyant setup, there’s no denying that economic clouds linger. Growth momentum is steady but patchy, inflation is easing yet volatile, and global oil prices remain a wild card.
The Reserve Bank of India’s next policy meet looms large. With fresh GST changes in play, the RBI’s inflation forecast and rate stance could see revisions.
Investors are trying to square this circle—short-term optimism on equities, but medium-term caution on macro headwinds.
Eyes on 25,000 Mark
For the Nifty, 25,000 is more than just a round number. It’s a psychological ceiling, a marker that can sway retail flows and algo trades alike. If the index clears and holds above that level, momentum chasers may flood back in.
Sensex, too, sits within striking distance of 81,000. Small milestones, but they often set the tone for sentiment.
Markets have a funny way of overreacting to round numbers. Today might just be one of those days.
