Auto and consumer durable demand set to drive Indian stock market sentiment post Sept 22
Following the government’s GST rationalisation, the automobile and consumer durables sectors have emerged as the biggest beneficiaries, with expectations that rate cuts could revive sales that have remained stalled in recent quarters amid weak urban demand.
Stocks from both sectors have witnessed strong gains, providing significant support to the Indian stock market, which has remained buoyant since the rollout of the new consumption tax rates on September 3. The move lowered tax slabs on several consumer durables and automobiles, boosting investor sentiment and creating optimism for a consumption-led recovery.
However, the market movement remained restrained due to higher US tariffs, overshadowing the domestic positive factors and curbing investor enthusiasm despite supportive measures like the GST rate cut.
Nevertheless, looking ahead, analysts remain upbeat on the potential for a second leg of the rally in these counters after September 22, when the new rates are expected to kick in. This, coupled with festive buying, is likely to lead to a sharp rise in consumer demand.
Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said, “The Indian macro picture remains robust. Financial stability, as reflected in fixed deposit (FD) and current account deficit (CAD) numbers, strong GDP growth prospects, and falling inflation, are positive indicators. After September 22, the sharp rise in demand for consumer durables, particularly automobiles, will dominate economic and business news. This, in turn, will provide positive sentimental support to the market.”
