The stock market soared on Monday, driven by the promise of Prime Minister Narendra Modi to overhaul the Goods and Services Tax (GST) system, making a range of essentials and electronics cheaper and triggering a wave of buying across sectors.
The benchmark Nifty 50 jumped 1.51 per cent to 25,003.90, while the BSE Sensex climbed 1.34 per cent to 81,682.61, setting up both indices for their best sessions in months, according to figures mentioned in a Reuters report.
If gains hold, Nifty is on course for its best day in three months while the Sensex was on track for its best session in two months.
Broader indices also joined the rally, with mid-cap and small-cap stocks rising 1.5 per cent and 1.3 per cent, respectively.
What triggered stock market rally?
Modi's GST reform promise
In his Independence Day speech from the ramparts of the Red Fort on Friday, PM Modi announced what he termed as a massive “Diwali gift” for the people of the country, promising reforms in the GST regime.
The stock market rally of Monday follows the above-mentioned announcement of sweeping tax reforms, including the simplification of GST slabs into a two-rate structure of five per cent and 18 per cent, scrapping the 12 per cent and 28 per cent rates currently applied to various goods.
{{/usCountry}}The stock market rally of Monday follows the above-mentioned announcement of sweeping tax reforms, including the simplification of GST slabs into a two-rate structure of five per cent and 18 per cent, scrapping the 12 per cent and 28 per cent rates currently applied to various goods.
{{/usCountry}}The changes are set to take effect from October, the Diwali month.
The new structure is expected to make daily essentials, small cars, and electronics more affordable, boosting consumer demand and potentially fueling stronger corporate earnings by FY27.
“Lower rates should boost overall demand and improve the fiscal year 2027 earnings outlook,” Reuters quoted Citi Research as saying in a note.
Auto, consumer stocks lead charge
Automobile and consumer stocks led sectoral gains on Monday, with the auto index jumping 4.5 per cent and consumer shares gaining 2 per cent. Reports citing sources have said that the government has proposed cutting GST on small cars to 18 per cent from 28 per cent, providing a direct boost to the sector.
From the Sensex firms, Maruti, Bajaj Finance, Mahindra & Mahindra, UltraTech Cement, Trent and Bajaj Finserv were among the major gainers.
Larsen & Toubro, ITC, HCL Technologies and Infosys were the laggards.
"There are strong tailwinds for the market with potential to take it higher. Declarations by the prime minister on the next major reforms in GST by Diwali are a big positive. S&P upgrading India’s sovereign credit rating is another major positive," PTI news agency quoted VK Vijayakumar, chief investment strategist, Geojit Investments Limited.
Financial heavyweights gained ground, rising 1.8 per cent, after S&P upgraded ratings for top lenders HDFC Bank and State Bank of India, citing improving credit metrics and stable economic outlook.
Oil slips as geopolitical risks ease
Meanwhile, global oil prices eased after the US chose not to impose new sanctions on Russian oil exports following a high-stakes meeting between Presidents Donald Trump and Vladimir Putin in Alaska on Saturday.
The meeting, aimed at moving toward a Ukraine ceasefire, was seen by markets as a de-escalation signal, calming energy price volatility.