GST Reforms Spark Morning Rally, but Profit Booking Drags Sensex and Nifty Lower

The stock market started September 4 on a high note, only to end with much smaller gains than traders had hoped. The trigger? Sweeping GST reforms initially lifted sentiment but later gave way to profit booking, global jitters, and continued foreign selling.

Market Performance

In early trade, markets were buzzing with optimism:

• Sensex surged 888.96 points to touch 81,456.67
  
  
• Nifty jumped 265.7 points to hit 24,980.75
  
  

But by the closing bell, that momentum had fizzled out.

• Sensex ended at 80,718.01, up just 150.3 points (0.19%)
  
  
• Nifty settled at 24,734.30, up only 19.25 points (0.08%)
  
  

The broader market mood reflected the shift:

• 1,714 shares advanced
  
  
• 2,227 declined
  
  
• 139 remained unchanged
  
  

GST 2.0: The Big Trigger

The all-powerful GST Council announced a complete overhaul of the tax regime. Everyday items—parathas, hair oil, ice creams, TVs—will now cost less. Tax incidence on personal health and life insurance is cut to nil.

That set off a broad-based buying spree in morning trade. Auto, FMCG, and consumer durable stocks were the stars of the show.

From Sensex firms:

• Mahindra & Mahindra jumped over 7.5%
  
  
• Gains also came from Bajaj Finance, Hindustan Unilever, Bajaj Finserv, ITC, Tata Motors, and UltraTech Cement
  
  

But by the end of the session, profit booking pulled markets down. While most sectors opened strong, only auto and FMCG managed to close in green, though with trimmed gains.

Global Cues Weigh on Sentiment

The global picture did little to support the rally.

• Asian markets:
  
  
  • South Korea’s Kospi and Japan’s Nikkei held firm
    
    
  • Shanghai Composite fell 1.6%, on track for its third straight decline
    
    
  • Hong Kong’s Hang Seng also traded lower
    
    
  • MSCI Asia-Pacific index slipped 0.2%
    
    
• US backdrop:
  
  
  • Weak job openings data raised hopes of a Fed rate cut
    
    
  • Traders now price in a 96.6% probability of a cut in September
    
    
  • But the Fed’s “Beige Book” offered a mixed economic outlook, with tariff concerns dominating
    
    

The result? Caution overtook optimism across global equities.

FII Selling Adds Pressure

Foreign investors continued their selling streak:

• FIIs sold ₹1,666.46 crore worth of equities on September 4
  
  
• DIIs stepped in, buying ₹2,495.33 crore
  
  

The broader trend, however, has been unfavorable:

• FIIs pulled over ₹1.3 lakh crore from Indian markets in 2025 so far
  
  
• Outflows are inching closer to the record ₹1.5 lakh crore exodus of 2022
  
  
• Meanwhile, DIIs’ ownership hit nearly 18% in March, surpassing foreign investors’ stake
  
  

The selling reflects global rotations into Chinese equities and worries over India’s stretched valuations.

Summary

September 4 told a familiar story of Indian markets: a strong start, but a subdued finish.

• GST reforms sparked an early rally, lifting hopes of stronger consumption ahead
  
  
• But profit booking, weak global cues, and sustained FII selling pulled indices back from the day’s highs
  
  
• By close, gains looked modest compared to the euphoria seen in morning trade
  
  

The market’s reaction shows that while reforms can ignite optimism, sustaining momentum requires more than just tax tweaks. Global uncertainty and foreign flows continue to shape the day’s narrative.