Nifty Financial Services Rises 1.14% as GST Exemption on Insurance Premiums Lifts Sentiment

Mumbai, September 4, 2025 – The Nifty Financial Services index gained 1.14% reaching an intraday high of ₹26,024.85 so far in early morning trade on Thursday. The upward movement in the index came after the GST council’s rate rationalisation, exempting premiums on individual life and health insurance policies from tax.

Market Snapshot

As of September 04, 2025, 12:19 PM, the NIFTY FIN SERVICE index stands at ₹25,888.70, marking a gain of 156.15 points or 0.61% from its previous close of ₹25,732.55. The market opened in green, and touched an intraday high of ₹26,024.85, trading volume of 613.39 lakh shares and a total value of ₹5,958.82 crore so far. Further, the index had a P/E ratio of 16.84 and a P/B ratio of 2.66, which suggests that it has a premium valuation.

Top Gainers

Among the top gainers today were Bajaj Finance, which led the rally by climbing 5.35% to ₹944.25. The next top gainers were Bajaj Finserv with a gain of 2.49% at ₹2,015.00, closely followed by ICICI Lombard General Insurance, Cholamandalam Investment, and SBI Cards, gaining 2.07%, 1.39%, and 1.01%, respectively.

Notable Laggards

On the other hand, companies like REC Ltd led the losers’ pack, slipping 0.64% to ₹365.45 with volumes worth ₹51.60 crore. Other notable declines came from Jio Financial Services, HDFC AMC, PFC, and SBI, each recording modest losses amid mild profit-booking pressures.

Why the Rally?

In a positive move, the GST council has rationalised existing GST rates on life and health insurance premiums. Under the move, the council has completely removed the present 18% GST on life and health insurance premiums, exempting them from the tax completely. The move is expected to boost insurance penetration as reduced costs for customers will support demand. Now, general and life insurers will gain directly from improved affordability and wider reach.

Outlook and Takeaway

The rate rationalisation by the GST council is expected to benefit NBFCs and financial distributors, especially in segments where penetration has been low so far. The changes will also improve product affordability, which will support long-term growth. However, as the move to remove GST from insurance premiums stirs positive reaction from the sector, particularly for life and health insurers, investors should keep a lookout for potential margin pressures from competitive pricing, regulatory adjustments in insurance norms, and the pace of demand revival in rural and semi-urban markets.

REF: https://www.nseindia.com/market-data/live-equity-market?symbol=NIFTY FINANCIAL SERVICES

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