GST Sees Biggest Overhaul, Paradigm Shift To Spur Domestic Demand

Indian markets are poised to open sharply higher, driven by increased consumption and hopes of robust domestic GDP growth following the GST overhaul and ease-of-living reforms.

GST structure has been pared down to two slabs—5% and 18%— with a 40% rate reserved for sin and luxury goods. The sweeping overhaul is designed to make everything from daily essentials and food items to appliances and small cars more affordable, while discouraging unhealthy consumption.  

These GST reforms represent a paradigm shift toward economic rationality, with rate reductions on essentials like dairy, medicines, and food directly benefiting consumers due to their inelastic nature. This streamlined two-slab structure prioritises fundamental economic drivers while significantly reducing compliance burdens for businesses.  

Combined with RBI rate cuts, FY26 income tax rebates, and moderating inflation, these reforms create multiple stimuli for consumption and economic growth. The policy demonstrates a transformative commitment to inclusive taxation to enhance ease of living and doing business across all citizen segments.  

In global cues, the Nasdaq jumped 218 points or 1% to 21,497, and the S&P 500 climbed 32 points or 0.5% to 6,448. The Dow, on the other hand, posted a modest loss, edging down 24.58 points to 45,271. 

The notable rebound by the Nasdaq came amid a surge by shares of Alphabet, with the Google parent spiking by 9.1%. Alphabet rallied after a federal judge ruled the company would avoid the most severe consequences in a landmark antitrust case.  

On the economic front, the U.S. Bureau of Labour Statistics reported weaker-than-expected labour market data. Job openings fell to 7.181 million in July, below both the forecast of 7.380 million and June’s 7.357 million. The ratio of job openings to unemployed persons dropped to 0.99, slipping below the 1.0 mark for the first time since April 2021.  

Crude oil prices slid over 2% to $63.61 after reports surfaced that OPEC+ may increase production at this weekend’s meeting.  

Gold reached new all-time highs above $3570/oz, buoyed by soft US jobs data and global fiscal worries, with investors pricing in lower rates and persistently high geopolitical risks. The yellow metal is up over 41% year-on-year.  

Asian equities are trading higher after weak US job openings reinforced bets on a Federal Reserve interest-rate cut, boosting stocks and bonds on Wall Street.  

The Nifty staged a strong comeback yesterday, ending the session with a gain of 135 points, or 0.55%, to close at 24,715. The short-term trend of the Nifty turned positive as the Nifty closed above the 5-day EMA placed at 24648. A decisive level above 50 DEMA (24793) could bring Nifty back into bullish momentum towards the 25000 level. Support for Nifty has shifted up to 24500. 

Source: HDFC Securities Prime Daily, 4 Sept 2025 

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