Why market rose today? Sensex settles 676 pts higher, Nifty tops 24,850; GST reforms among 5 key factors behind today's surge

Sensex climbed more than 1,100 points at its peak and the Nifty briefly touched the 25,000 mark on Monday, lifted by easing concerns over Russian oil supplies following a meeting between the U.S. and Russian presidents, alongside optimism over the Indian government's proposed goods and services tax (GST) reforms.

The BSE Sensex jumped 676.09 points, or 0.84%, to 81,273.75 at the close, while the NSE Nifty 50 advanced 245.65 points, or 1%, to end at 24,876.95.

The market capitalization of all listed companies on the BSE increased by Rs 5.39 lakh crore to Rs 451.16 lakh crore.

"The proposed rationalisation of GST is a sentiment booster for the domestic market," said Vinod Nair, Head of Research at Geojit Investments, adding that the recent conclusion of the U.S. and Russia summit, without any escalation in geopolitical tensions, has helped ease investor anxiety.

"The automobile sector outperformed, emerging as a key beneficiary of the anticipated tax reforms. In H2FY26, we expect the consumption-led sectors to show some traction on account of demand revival," said Nair.

Auto stocks led the rally, climbing 4.2% as Maruti Suzuki, India’s largest carmaker, surged 8.8% and two-wheeler giant Hero MotoCorp jumped 5.9%.

Consumer shares added 1.2%, while the mid-cap and small-cap indices advanced 1.1% and 1.4%, respectively.

Financial stocks gained 1.1%, buoyed by an S&P ratings upgrade on major lenders including HDFC Bank and State Bank of India. HDFC Bank rose 0.6%.

Market experts said Prime Minister Narendra Modi’s signal of potential goods-and-services tax cuts has boosted confidence, particularly in consumption-driven sectors. Autos, financials, consumer durables and domestic-focused industries tied to infrastructure spending are seen as the biggest beneficiaries.

Here are the five key drivers behind today’s rally:

1) Trump-Putin talks

After meeting Russian President Vladimir Putin in Alaska on Friday, U.S. President Donald Trump signaled greater alignment with Moscow’s stance on prioritizing a peace deal in Ukraine over a ceasefire.

Trump is set to meet Ukrainian President Volodymyr Zelenskiy and European leaders on Monday to discuss possible security guarantees for Kyiv, though concrete proposals remain unclear.

Oil prices eased after Washington held back from imposing fresh curbs on Russian exports following the Trump-Putin talks. Trump also said he did not yet need to consider retaliatory tariffs on countries such as China that continue to buy Russian oil, though he might revisit the issue “in two or three weeks.” The remarks tempered fears of immediate supply disruptions.

“India-U.S. trade talks are unlikely before the August 27 deadline. The ‘Trump sword’ of a potential 50% tariff on India will restrain market enthusiasm otherwise fueled by positive news. The outcome of today’s White House meeting on the Russia-Ukraine conflict will be closely watched,” said Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments.

2) GST reforms

Sentiment was also buoyed by the Indian government’s plan to push sweeping tax reforms aimed at supporting growth amid trade tensions with the U.S.

India has proposed lowering the Goods and Services Tax on small cars to 18% from 28%, Reuters reported citing a government source, part of broader consumption tax cuts announced by Prime Minister Narendra Modi on Friday. The move is expected to lift sales for automakers including Maruti Suzuki, the country’s largest carmaker.

The federal government is also weighing a reduction in GST on small petrol and diesel cars to 18%, as well as cuts on health and life insurance premiums to 5% or even zero from the current 18%, the report said.

The measures, if approved, are likely to be rolled out by Diwali in October, India’s largest shopping season.

“There are strong tailwinds for the market with potential to take it higher. The prime minister’s declaration on the next phase of GST reforms by Diwali is a major positive. The expectation is that most goods and services will fall into the 5% and 18% brackets,” said Dr. V.K. Vijayakumar of Geojit Investments.

Vijayakumar said that autos and cement, currently taxed at 28%, stand to gain, citing companies such as TVS Motors, Hero, Eicher, M&M, and Maruti as likely beneficiaries. Insurance companies could also benefit if premiums move into the lower tax band. “S&P 500’s upgrade of India’s sovereign credit rating is another positive, though markets largely ignored it amid strong negative news flow,” Vijayakumar said.

3) S&P upgrade

S&P Global Ratings on Thursday raised India’s long-term sovereign credit rating to “BBB” from “BBB-,” with a stable outlook, the country’s first upgrade in 18 years. The move sent 10-year government bond yields down about 10 basis points to 6.4%.


The agency cited India’s strong economic growth, improved monetary policy credibility and sustained fiscal consolidation as reasons for the upgrade. It follows S&P’s decision in May to lift India’s outlook to positive from stable, highlighting robust growth and better quality of government spending.


India’s real GDP grew an average of 8.8% between fiscal 2022 and 2024, the fastest in Asia-Pacific, and is projected to expand at 6.8% annually over the next three years. That momentum, S&P said, is helping to moderate the government’s debt burden despite wide fiscal deficits. The agency expects India’s debt-to-GDP ratio to fall to 78% by fiscal 2029, from 83% in fiscal 2025.


S&P also noted that U.S. tariffs are likely to have a limited impact, given India’s reliance on domestic demand rather than trade. Fitch has maintained India at “BBB-” since 2006, while Moody’s rates it at “Baa3” since 2020.

4) Asian peers rally

Asian equities edged higher on Monday, buoyed by a risk-on mood ahead of a pivotal week for U.S. interest-rate policy, while oil prices slipped as fears over Russian supply disruptions eased.

Benchmark indices in Japan and Taiwan touched record highs, while Chinese blue chips climbed to their strongest level in 10 months. The broader MSCI index of Asia-Pacific shares outside Japan eased slightly, after reaching a four-year peak last week. Chinese blue chips advanced 1%, extending quarterly gains to nearly 8%.

Japan’s Nikkei rose 0.9% to another record, supported by expectations of easier global monetary conditions. Markets are pricing in an 85% chance of a quarter-point cut at the Federal Reserve’s September 17 meeting, with traders also betting on additional easing by year-end. The focus this week will be the Federal Reserve’s Jackson Hole symposium from August 21 to 23, where Chair Jerome Powell is expected to outline the economic outlook and policy path.

In Europe, futures pointed to modest gains, with Euro Stoxx 50 and FTSE futures up 0.2% and Germany’s DAX futures 0.1% higher.

5) Technicals

On the technical front, Rupak De, Senior Technical Analyst at LKP Securities said the Nifty opened with a gap-up but faced initial resistance at 25,000, leading to an intraday decline due to profit booking at higher levels.

The sentiment, however, remains positive, with the potential to revisit 25,000 in the coming days, said De.

Immediate support is placed at 24,800, below which the index may drift towards 24,500, said De, adding that on the higher side, a decisive move above 25,000 could trigger a larger rally in the market.

Going forward, with the Nifty reclaiming its short-term moving average (20-DEMA) around 24,750, sustaining above this level will be crucial for a move toward 25,250, said Ajit Mishra, SVP, Research at Religare Broking.

"Traders are advised to remain focused on sectoral rotation, with auto and consumption themes likely to stay in favor, while maintaining a stock-specific and risk-managed approach," said Mishra.