Sensex Up by 696 Points

Auto and Consumer indices outperformed

Shrikant Chouhan, 

Head Equity Research, 

Kotak Securities

Mumbai, August 18, 2025: Today, the benchmark indices bounced back sharply. The Nifty ends 251 points higher, while the Sensex was up by 696 points. Among sectors, Auto and Consumer indices outperformed, with Auto gaining 4% and Consumer up by 3.30%. Despite strong market sentiment, the IT index registered intraday profit booking at higher levels. Technically, after a gap-up open, the market witnessed intraday selling pressure at higher levels. However, it succeeded in closing above the 20-day SMA (Simple Moving Average) or 24,750/81000, which is largely positive.

We believe that the short-term market outlook is positive, but buy on intraday dips and sell on rallies would be the ideal strategy for day traders. On the downside, 24,800/81000 and the 20-day SMA of 24,750/80800 would be key support levels, while 25,000 (50-day SMA)/81700 and 25,100/82000 could act as crucial resistance areas for the bulls. However, below 24,750/80800, the uptrend would become vulnerable. In that case, traders may prefer to exit their long positions.

Gaurav Garg, Lemonn Markets Desk, adds:

Bulls charged ahead on Dalal Street as Indian equities posted a robust rally to kick off the week, with the Sensex surging 676 points (0.84%) to close at 81,273.75 and the Nifty soaring 251 points (1.02%) to 24,882.50. The sharp up move was fueled by optimism over reports of a significant Goods and Services Tax (GST) rationalisation and broad-based buying in auto, consumption, metal, and realty stocks. 

Key Drivers:

• GST Reform Buzz: Market sentiment was buoyed by reports suggesting that GST may soon be simplified into just two major slabs—5% and 18%—alongside a higher sin tax of 40%. Brokerages hailed the proposal as a potential game-changer for economic growth, anticipating it would stimulate consumption and boost corporate revenues.
• Momentum Shift: The market’s six-week downtrend appears poised for reversal as investors adjust their outlook for improved earnings and re-rate valuations in anticipation of the far-reaching impacts of the GST overhaul.

Sector Performance

• Auto: Nifty Auto led sectoral gains, jumping 4.4% amid expectations of renewed demand and faster inventory clearances.
• Realty: Nifty Realty rallied 2.6% as lower taxes could spurn housing demand.
• Metals: Metal stocks advanced 2%, extending recent gains on hopes of higher construction and manufacturing activity.
• FMCG & PSU Banks: FMCG rose 1.5% while PSU Banks ended 0.6% higher, reflecting broad sectoral strength.
• Underperformers: IT dipped 0.4% as profit-taking set in, while Energy, Pharma, and Media were largely flat.

Broader Market

• Midcaps & Small Caps: The rally was even more pronounced outside frontline indices, with the Nifty Midcap 100 climbing 1.3% and Nifty Smallcap 100 up 1.4% as investors rotated into high-beta names.
• Market Breadth: Advancers outpaced decliners, underscoring the upbeat sentiment—2,319 shares advanced, 1,447 declined, and 133 remained unchanged.

Technical Outlook

• Levels to Watch: The Nifty’s firm close above 24,750 sets the stage for potential further gains towards 24,900–25,000. On the downside, immediate support is seen at 24,600–24,500—levels
• Reversal in Trend: The bullish price action and strong sectoral momentum mark a clear reversal from the last six weeks’ downward drift.

Investors cheered tax reform optimism, propelling the indices to new highs and sparking a broad rally across sectors. Market participants will be keenly eyeing developments on the GST front, with regulatory clarity likely to dictate the tone for the sessions ahead."