Overview of market movements
Indian equity markets rebounded sharply on Monday, 18 Aug 2025. Gains were broad‑based, with auto, consumer and financial stocks leading the rally thanks to expectations that the government will slash GST on small cars and insurance premiums, simplify the tax structure and introduce a “GST 2.0” framework. The rally was also supported by S&P Global’s sovereign‑rating upgrade of India from BBB– to BBB and by easing fears over global oil supply after diplomatic talks between the United States and Russia. Autos and consumer sectors surged as investors bet that lower taxes would spur demand, while IT stocks lagged and there was modest profit‑taking in defensives. Overall market breadth was strong, with advances outnumbering declines and mid‑cap and small‑cap indices showing healthy gains.
Key indices (close on 18 Aug 2025)
| Index | Close | Point change (≈) | % change |
|---|---|---|---|
| Nifty 50 | 24,876.95 | +245.65 | +1.00 % |
| BSE Sensex | 81,273.75 | +676.09 | +0.84 % |
| Bank Nifty | 55,734.90 | +393.05 | +0.71 % |
| Fin Nifty (Financial Services) | 26,609.10 | +265.65 | +1.05 % |
| Midcap Nifty 100 | 12,811.30 | +172.20 | +1.36 % |
Other sectoral indices showed strong gains: Nifty Auto +4.6 %, Nifty Consumption +2.7 %, Nifty Realty +2.4 %, Nifty India Manufacturing +1.9 %, Nifty FMCG +1.9 %, and Nifty Metal +1.5 %. Advancers outpaced decliners on the NSE, with about 1 ,896 stocks up against 821 down.
Top gainers and losers (Nifty 50)
| Top gainers | LTP (₹) | Change (%) | Drivers |
|---|---|---|---|
| Maruti Suzuki | 14 090.00 | +8.9 % | Proposed GST cut on small cars (tax reduction to 18 %) spurs optimism for small‑car demand. |
| Hero MotoCorp | 4 990.00 | +6.0 % | Beneficiary of GST cut proposals for two‑wheelers; momentum in premium bikes. |
| Nestlé India | 1 146.40 | +5.2 % | Strong Q1 results and higher guidance; consumption stocks buoyed by expected lower tax slabs. |
| Bajaj Finance | 905.05 | +5.1 % | Rating upgrade and improved liquidity; financials rally on hopes of stable policy environment. |
| Bajaj Auto | 8 592.00 | +4.6 % | Beneficiary of GST reforms and strong exports; improved outlook for EV segment. |
| Top losers | LTP (₹) | Change (%) | Drivers |
|---|---|---|---|
| ITC | 405.30 | –1.49 % | Profit‑taking after recent rally; concerns over high taxation on “sin goods” in proposed GST reform. |
| Eternal (formerly Zomato) | 314.10 | –1.35 % | Volatility following earnings; weight reduction in benchmark index. |
| Tech Mahindra | 1 470.50 | –1.09 % | Weakness in IT services amid cautious US client spending. |
| Larsen & Toubro (L&T) | 3 640.00 | –1.01 % | Marginal profit‑booking after recent gains; mixed order‑book signals. |
| NTPC | 336.30 | –0.90 % | Slight pullback amid rotation into growth sectors. |
Other relevant statistics
- Market breadth: Advancers greatly exceeded decliners (≈1,896 up vs. 821 down on the NSE). Small‑cap and mid‑cap indices gained around 1–1.3 %, with notable movers such as PG Electroplast, KEC International, Amber Enterprises, Bata India and Sagility.
- Sector performance: Auto stocks were the biggest winners, lifted by the proposed GST cut on small cars and motorcycles; consumer stocks also gained on the expectation of lower taxes. Insurance stocks (ICICI Prudential, SBI Life, LIC) climbed 2–5 % on potential GST reduction on premiums. IT stocks lagged as investors rotated into cyclical sectors.
- Currency and commodities: The rupee strengthened slightly against the US dollar amid improved risk sentiment. Crude oil prices eased after talks between the US and Russia reduced supply‑disruption fears. Gold remained range‑bound.
Global cues
- US markets: Futures on the Dow, S&P 500 and Nasdaq were modestly higher as investors anticipated potential interest‑rate cuts from the US Federal Reserve following softer economic data.
- Asia: Japanese indices were up (Nikkei 225 +0.62 %, Topix +0.42 %) as a weaker yen bolstered exporters. Korean markets were lower (Kospi –1.06 %, Kosdaq –1.44 %) amid profit‑taking. Hong Kong and Chinese markets traded mixed.
- Geopolitical: Diplomatic talks between US President Donald Trump and Russian President Vladimir Putin helped ease concerns about oil supply disruptions, supporting global risk sentiment.
Corporate updates and key stocks to watch
- GST reforms: The government has proposed a sweeping GST 2.0 overhaul that would replace the multiple tax slabs with two primary rates (5 % and 18 %) while imposing a 40 % levy on sin and luxury goods. Small petrol/diesel cars could see GST reduced from 28 % to 18 %, while GST on insurance premiums may drop to 5 % or even zero. The proposals are expected to be discussed by the GST Council in October.
- Sovereign rating upgrade: S&P Global upgraded India’s long‑term sovereign credit rating to BBB from BBB– with a stable outlook, citing strong economic fundamentals and prudent policy management. This is India’s first upgrade in 18 years and should help reduce borrowing costs and attract more foreign investment.
- Sector beneficiaries: The auto sector (Maruti Suzuki, Hyundai Motor India, Tata Motors, Mahindra & Mahindra) and insurance companies (ICICI Prudential, SBI Life, LIC) are poised to benefit most from the proposed tax cuts. Investors should monitor these stocks for follow‑through momentum.
- Upcoming earnings: Look out for results from large‑caps such as Infosys, Indian Oil, Ashok Leyland and Hindustan Aeronautics later in the week. Their commentary on demand and margins will influence sectoral sentiment.
Outlook for tomorrow (19 Aug 2025)
Markets are likely to open on a cautious note following Monday’s sharp rally. Key considerations:
- Profit‑taking: After a one‑day surge, some consolidation or profit‑booking is expected in high‑beta sectors such as autos and consumption.
- FII flows: Observers will watch whether foreign institutional investors continue to buy into the India upgrade story or use the rally to pare positions. Domestic institutional flows remain supportive.
- Global triggers: US Federal Reserve minutes, crude‑oil movements and Chinese economic data may impact sentiment. Asian markets’ direction could influence opening levels.
- Corporate announcements: Any clarity from the government on GST reform details or comments from rating agencies could further bolster sentiment. Earnings from Infosys and other majors could lead to sector‑specific moves.
Overall, while near‑term consolidation is possible, the medium‑term outlook remains positive because structural reforms, a rating upgrade and improving macro signals are expected to drive earnings growth and expand valuations. Investors are encouraged to focus on quality companies in autos, financials, infrastructure and consumption while remaining alert to global volatility and profit‑booking corrections.
