Bajaj Finance, Bajaj Housing Finance shares rally up to 7% on GST reform hopes

Shares of Bajaj Finance and Bajaj Housing Finance surged up to 7% on Monday, as investors piled into financial stocks on hopes of potential Goods and Services Tax (GST) cuts and relief from India’s first sovereign credit rating upgrade in nearly two decades.

Bajaj Finance rose as much as 6.7% to Rs 919.15 on the BSE, while Bajaj Housing Finance gained 3.9% to Rs 117. The rally tracked a broader market rebound after six weeks of declines, with investors betting on sweeping tax reforms to be announced by Diwali.

Why the rally matters

Analysts say Bajaj Finance stands to gain from lower Goods and Services Tax rates on consumer durables, which would cut monthly instalment costs and expand lending volumes in its key financing segments.

“EMI obligation for consumer durables should reduce, benefitting NBFC lending in this segment,” Motilal Oswal noted. The brokerage included Bajaj Finance on its list of top stock beneficiaries from GST rationalisation.

Bajaj Housing Finance, meanwhile, moved higher on expectations that stronger consumption and household balance sheets could spill over into credit markets. Alongside this, both Bajaj Finance and Bajaj Housing Finance stand to gain from the sovereign rating upgrade, which analysts said would ease offshore borrowing costs for Indian financial firms.

Credit upgrade boost

The rally also drew strength from S&P Global Ratings’ decision to lift India’s long-term sovereign credit rating to “BBB” from “BBB-,” the first upgrade in 18 years. Analysts expect the move to cut offshore borrowing costs for Indian financials.

“S&P upgrade-related beneficiaries – this is a significant macro and structural positive for the overall Indian market,” Motilal Oswal said. “Indian financial companies, such as Bajaj Finance, accessing the ECB market could see a 15–20bp reduction on their coupon payments.” Lower funding costs would strengthen both Bajaj Finance’s lending margins and Bajaj Housing Finance’s ability to expand in mortgages.

Wider market lift

The reform and rating buzz rippled through autos, insurance, and consumer firms. Shares of Maruti Suzuki, Mahindra & Mahindra, Hero MotoCorp, Bajaj Auto and Eicher Motors gained between 2% and 8%, while ICICI Prudential, SBI Life and LIC rose 2%–4%. The broad-based gains pushed benchmark indices more than 1% higher.

Investors now await the October GST Council meeting, where the final rate cuts will be decided, setting the tone for Diwali demand and the next leg of financial sector growth.

Also read | Why market is rising today? Sensex soars 1,100 pts, Nifty tops 25K; GST reforms among 5 key factors behind today's surge

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