Markets look to GST cuts for boost; consumption, auto and metals stocks in focus: Deven Choksey

With the GST Council meeting around the corner, equity markets are keenly watching for possible rate reductions that could revive consumption and lift demand across sectors. According to Deven Choksey, MD, DRChoksey FinServ Pvt. Ltd., lower GST rates could be the turning point for segments like FMCG, automobiles and select manufacturing players.

Choksey said that the consumption space is expected to be the first beneficiary if rate cuts materialise. “FMCG demand has remained sluggish for nearly a year. With GST costs coming down, companies in this sector could see a rebound, supported further by lower interest rates and higher disposable incomes,” he explained.

The automobile sector too is likely to gain. “Rate reduction makes the upside much clearer. When combined with cheaper loans and improved affordability, we see a strong revival of demand. GST cuts would add sweetness to this journey,” Choksey added.

Beyond consumption, industrial manufacturing and B2B players may also benefit from lower GST rates on components and input tax credits, which would improve their cost structures and margins.

On the metals front, Choksey is optimistic about both demand recovery and structural changes within the industry. He pointed to companies increasingly adopting renewable energy such as solar and wind, which would lower power costs and improve profitability. “With global sourcing demand also on the rise, metals—both ferrous and non-ferrous—present a selective buying opportunity,” he said.

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Power distribution companies a safer bet; defence a long-term story

Turning to the power sector, Choksey sees renewed strength in both generation and distribution, driven by recovering industrial activity and infrastructure growth. “Between the two, power distribution looks safer because once capex is completed, these companies generate strong cash flows,” he said.Discussing the defence sector, which has seen sharp swings, Choksey advised caution for short-term investors. “Near-term valuations look fully priced, but for those with a 3–5 year horizon, defence remains a strong long-term story,” he noted.On Coal India, Choksey highlighted encouraging production and dispatch numbers, with sales in August rising 8% year-on-year. However, he admitted that PSU stocks often face volatility and remain overlooked by investors in favour of higher-growth sectors.

The sugar sector also drew attention after a sharp rally following the government’s ethanol-blending push. Choksey said: “Ethanol blending is providing a structural boost to sugar companies. A good monsoon will help production, though higher FRP costs may weigh on margins. Larger sugar firms remain better placed to benefit.”

Pent-up demand to start reflecting in September quarter

Looking at the broader market, Choksey said that the overall texture suggests pent-up demand across industries, which will start reflecting in the September quarter. “Investors may wait for the GST decision, but markets seem to be bottoming out this month. This sets up a buying opportunity as results start to come in,” he concluded.

With consumption expected to lead the revival, followed by auto, manufacturing, power and metals, investors are gearing up for a potential re-rating of multiple sectors if the GST Council delivers on expectations this week.

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