'Nifty To Hit ‘Lifetime Highs' In Six Months': D-Street Experts Bet On THESE Sectors Post GST Overhaul

The latest goods and services tax (GST) reforms are expected to boost momentum in the automobile, metals and financial services sectors, driven by a renewed focus on stimulating consumption, according to market experts.

After the introduction of the reduced tax slabs of 5% and 18%, which are set to be implemented from Sept. 22, market veterans believe this will revive demand, especially in entry-level vehicles and consumer goods, while improved sentiment could lead to a turnaround in credit cycles.

Speaking to NDTV Profit on the move, Gautam Shah of Goldilocks Global Research, said that the markets are responding positively to GST 2.0, with technical indicators suggesting durability in the recent rally.

“As a technician looking at the charts and trying to tie in the fundamentals, I'm tempted to believe that this move today can be durable, sustainable, and could potentially lead to a lot more upside on the upside. Because anyway, there is a lot of liquidity waiting on the sidelines wanting to come in,” he noted.

The GST Council has approved a major overhaul of the tax structure since its launch in 2017. The four existing slabs - 5%, 12%, 18% and 28% - have now been reduced to just two: 5% and 18%. A special 40% rate will apply to luxury items and sin goods like tobacco and high-end cars. Rates have been slashed on essentials, medicines, small cars and appliances. The move aims to boost domestic demand and counter Donald Trump's tariffs on India.

According to Shah, if the benchmark Nifty 50 sustains above the key 24,850 resistance level, it could soon move toward 25,200 and even 25,600, with a potential to hit “lifetime highs” within three to six months.

“From a numbers perspective, 24,850 for me has been an important resistance. We are going to see a lot of growth right now. And if we do sustain above it today and close above it, I'm tempted to believe that we will move towards levels of 25,200 and eventually 25,600….the point from where we corrected in the recent past, and go back to lifetime highs within three to six months,” he said.

Among sectors, Shah sees strong momentum in auto, metals and a possible turnaround in financial services. He recommended a stock-picker’s approach, with a particular focus on mid- and small-cap stocks.

Echoing similar sentiments, Vinit Sambre, Head Equities, DSP Mutual Fund, welcomed the GST reform as a timely and necessary step to stimulate consumption, especially when other measures like income tax cuts and interest rate reductions have not delivered expected results. 

“Despite what the government had done in terms of the income tax benefits or the interest rate cut, we were still not really seeing that momentum coming back. So, from that perspective, I think this is a good combo, I can say, coming out in terms of the government policy framework, right from the announcement of the interest rate coming down, the income tax benefit and now the GST. I believe that this should start benefiting the demand,” Sambre said.

He outlined that demand in key areas such as FMCG and entry-level autos had stagnated and GST 2.0 could act as a much-needed catalyst. However, he cautioned that wage growth remains weak and the data is not encouraging.  According to Sambre, investors should adopt a gradual, systematic investment strategy rather than rushing in.

“So, I think it's okay to have a gradual way of investment. I'm not negative on the markets. I feel these are all good changes. But, investors should try to invest more gradually in a systematic manner because there are these volatilities plus markets to some extent,” he advised, maintaining a positive outlook for the auto and financial services sectors.

According to Gautam Duggad, Head of Research, Motilal Oswal Institutional Equities, GST 2.0 is the most significant reform of the Narendra Modi government. He said that it signals a clear policy shift towards stimulating consumption. 

“This is a very big move. This is the first time the government has prioritised consumption in its 11-year tenure so far. I mean, Modi 1.0, 2.0 is all over the place…was about manufacturing, PLI etc. The real push to consumption started coming in 2025 ….first with budget, now with this GST ....this will have direct and indirect impact on consumption….,” he said.

Like his peers, Duggad expects the auto, retail and FMCG sectors to be the biggest beneficiaries from the reforms in the GST structure.

“Auto is the biggest beneficiary, retail will benefit, and FMCG volumes will recover...but this is far bigger in terms of the signal that the government is giving. It will have an impact on equity multiples as well,” he said, maintaining a positive outlook for mid-cap stocks.