By Bharath Rajeswaran
(Reuters) -India’s equity benchmarks jumped more than 1% on Monday, after the government proposed sweeping changes to the complex goods and services tax regime, which will make daily essentials and electronics cheaper from October.
The federal government will propose a two-rate structure of 5% and 18%, doing away with the 12% and 28% tax that was imposed on some items, a government official said on Friday after Prime Minister Narendra Modi announced the reforms.
India’s Nifty 50 rose 1.51% to 25,003.9 points and the BSE Sensex gained 1.34% to 81,682.61, as of 10:06 a.m. IST.
The Nifty was on course for its best day in three months while the Sensex was on track for its best session in two months, if the gains hold.
India’s broader small-caps and mid-caps rose about 1.3% and 1.5%, respectively.
All 16 major sectors advanced, with autos and consumer stocks jumping 4.5% and 2%, respectively.
As part of the reforms, India has proposed lowering the goods and services tax on small cars to 18% from 28%, a government source said on Monday.
The lower rates should boost overall demand and fiscal year 2027 earnings outlook, Citi Research said.
Consumer staples, automobiles, cement, hotels, retail and consumer durables are likely to be the key beneficiaries of the tax rationalisation, analysts at Motilal Oswal said.
Shares of India’s top carmaker Maruti Suzuki gained 7.3%, while those of its biggest two-wheeler maker Hero MotoCorp surged 8.5%.
Heavyweight financials rose 1.8%, helped by S&P’s upgrade of top lenders HDFC Bank and State Bank of India.
Oil prices slipped after the U.S. refrained from imposing new measures to curb Russian oil exports, following Trump-Putin’s Friday meeting. [O/R]
After meeting Russian President Vladimir Putin in Alaska on Friday, U.S. President Donald Trump appeared more aligned with Moscow in seeking a Ukraine peace deal instead of a ceasefire first.
($1 = 87.4970 Indian rupees)
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sumana Nandy, Sonia Cheema and Mrigank Dhaniwala)
