For the week of September 1 to September 5, 2025, the Indian stock market staged a powerful comeback, recovering most of the previous week's losses. The driving force behind this rally was a landmark overhaul of the GST structure, which ignited a broad-based surge in investor confidence. Despite a volatile and flat end to the week, the benchmark indices closed with significant gains, led by a spectacular performance in auto and metal stocks.
This weekly wrap breaks down the key drivers, the top-performing sectors, and what the institutional investor trends signal for the market ahead.
Table of Contents
- How Did the Market Perform This Week?
- The Big Story: How GST Reforms Drove the Rally
- A Look at the Week's Performance in Numbers
- Which Stocks Were the Top Performers?
- Institutional Flows: The Tug-of-War Between FIIs and DIIs
- What is the Outlook for the Coming Week?
- Frequently Asked Questions (FAQs)
How Did the Market Perform This Week?
It was a strong week for Indian equities, with domestic policy reforms overpowering mixed global cues.
The gains were even more pronounced in the broader market, with the Nifty Midcap 100 and Smallcap 100 indices both rising by approximately 2.5%, indicating widespread market participation beyond the large-cap stocks.
The Big Story: How GST Reforms Drove the Rally
The primary catalyst for this week's bullish momentum was the comprehensive overhaul of the Goods and Services Tax (GST) regime. The market cheered the GST Council's decisions as a major step to boost consumption and economic activity. Key reforms included:
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Simplified Tax Slabs: The 12% and 28% tax slabs were eliminated, with most items moving to the more consumer-friendly 5% and 18% brackets.
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A Major Boost for the Auto Sector: A significant reduction in the GST rate for vehicles—including motorcycles, trucks, and SUVs—from 28% to 18% for most categories sparked a massive rally in auto stocks.
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A Push for Consumption: Levies on several everyday consumer goods were also cut, boosting sentiment for the entire consumption-themed basket of stocks.
A Look at the Week's Performance in Numbers
| Index |
Weekly Highlights |
| BSE Sensex |
+1.3% - Regained the 80,000 mark and closed strong. |
| NSE Nifty 50 |
+1.1% - Successfully held the crucial 24,700 level. |
| Nifty Metal |
+5.8% - Top-performing sector, buoyed by hopes from China’s steel capacity cuts. |
| Nifty Auto |
+5.5% - Rallied sharply following the GST rate cut announcement. |
| Nifty Midcap 100 |
+2.5% - Outperformed benchmarks, showing broad market participation. |
| Nifty Smallcap 100 |
+2.5% - Mirrored the gains in the midcap space. |
| Nifty IT |
-1.6% - Only sectoral index to end in red, facing profit-booking pressure. |
Which Stocks Were the Top Performers?
The week was marked by significant moves in individual stocks, particularly within the auto sector, which benefited directly from the GST news.
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Mahindra & Mahindra (M&M): The standout performer in the Nifty 50, surging 11.3% to record its best weekly gain in 15 months.
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Reliance Industries: Among the top contributors to the Nifty 50 weekly gains.
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Bharti Airtel: Also a key contributor to the Nifty 50 rally.
Institutional Flows: The Tug-of-War Between FIIs and DIIs
The institutional investment trend showed a clear divergence this week.
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Foreign Institutional Investors (FIIs) remained net sellers, offloading equities worth approximately ₹5,667 crore.
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Domestic Institutional Investors (DIIs) provided a strong cushion, making net purchases of a massive ₹13,444 crore.
This pattern shows that domestic conviction, driven by strong local policy reforms, successfully absorbed the selling pressure from foreign investors.
What is the Outlook for the Coming Week?
The market's positive performance this week was firmly rooted in domestic factors. While global markets remain cautious ahead of potential interest rate decisions by the U.S. Federal Reserve, the focus for Indian equities has shifted to the tangible benefits of the GST overhaul. For the week ahead, investors will be closely watching corporate commentary to see how these policy changes are expected to impact company earnings and future growth.
Frequently Asked Questions (FAQs)
Q1: What was the main reason for the stock market rally this week?
A1: The primary driver was the comprehensive overhaul of the GST tax structure by the GST Council. Significant tax cuts for key sectors like automotive and consumer goods, along with a simplification of the tax slabs, boosted investor confidence and sparked a broad-based rally.
Q2: Which sectors were the best performers this week?
A2: The Nifty Metal index was the top-performing sector, gaining 5.8%, followed closely by the Nifty Auto index, which surged 5.5%. Both sectors were seen as major beneficiaries of the week's policy announcements.
Q3: Why was the IT sector the only one to close in the red?
A3: The Nifty IT index fell by 1.6% due to profit-booking after a period of strong performance. The sector is also sensitive to global economic cues, which were mixed, and did not have a direct positive trigger from the domestic GST reforms.
Q4: What are FIIs and DIIs doing in the market?
A4: FIIs were net sellers for the week, pulling out around ₹5,667 crore. However, DIIs were strong net buyers, purchasing equities worth ₹13,444 crore, indicating robust domestic confidence in the market.
Q5: What should investors watch for in the coming week?
A5: With the GST news now priced in, investors will shift their focus to global cues, particularly any announcements from the U.S. Federal Reserve on interest rates. Domestically, the market will look for management commentary from various companies on how the GST changes will impact their future earnings and demand outlook.