The stock market’s response has been tepid, with benchmark indices like the Sensex and Nifty registering a marginal gain of just 0.18% in the trading sessions following the announcement.
New Delhi: The Indian government’s recent push to rationalise the Goods and Services Tax (GST) was intended to stimulate domestic consumption and bolster economic growth. However, the stock market’s response has been tepid, with benchmark indices like the Sensex and Nifty registering a marginal gain of just 0.18% in the trading sessions following the announcement.
A report published in the Financial Express, says the mood in the wider market has been “subdued”, with both the Midcap and Smallcap indices down 0.7% and 0.5%, respectively.
“The market’s excitement over GST 2.0 reforms is proving to be short-lived as the benchmarks are facing profit booking at higher levels,” Nandish Shah, deputy vice president at HDFC Securities, told news agency Reuters.
In their analysis, FE attributes the lacklustre response to multiple reasons. For one, the FE reports, GST 2.0 is likely to give a fillip to the economy and corporate earnings, stiff tariffs of 50% by the US President are keeping investors worried. According to the article, many have also used this opportunity to book profits because they believe there isn’t much upside from here. Further, foreign portfolio investors (FPI) have continued with their selling spree, even in September, the FE report says.
Saurabh Mukherjea, founder of Marcellus Investment Managers, told FE that, “The GST cuts only partially offset the damage caused by the Trump tariffs. Our largest export destination has effectively jammed us.”
India Today analysis says that the consumer stocks, which had risen 2.7% over the past five sessions, slipped 1.1%, weighed down by Input Tax Credit (ITC), the amount of GST paid by a registered person on the purchase of goods or services used for business purposes. The stock, India Today points, fell 2% following media reports that the government may impose a fresh levy on tobacco products once the 40% GST compensation cess expires.
FE says despite the overall muted response, certain sectors have shown resilience since Prime Minister Narendra Modi’s announcement of the GST rationalisation on August 15, 2025. While the immediate market response to the GST rationalisation has been lacklustre, analysts remain cautiously optimistic about its long-term impact.
This article went live on September sixth, two thousand twenty five, at fifty-seven minutes past four in the afternoon.
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