Indian stock markets closed higher on Monday as PM Modi's tax cut proposal spurred gains in autos and consumer durables. The Nifty 50 ended at 24,874, up 1%, while the Sensex rose 0.84%.
Indian equities closed Monday's session with strong gains, largely driven by autos, consumer durables, and real estate, after Prime Minister Narendra Modi announced plans to lower consumption taxes on major categories, a move aimed at cushioning the impact of potential US tariffs and boosting domestic demand.
The Nifty 50 rose sharply by 1% to end at the 24,874 level, while the S&P BSE Sensex gained 0.84%, also closing at 81,273. The broader markets outperformed, with the Nifty Midcap 100 and Nifty Smallcap 100 indices each rallying over 1%.
Investor sentiment, which had been cautious amid higher US tariffs and muted June-quarter earnings, appeared to turn positive after Modi's announcement on cutting GST on everyday goods. Analysts believe the move could soften the blow of potential US tariffs and revive consumption demand.
Markets also drew strength from expectations of a potential pause on the 25% additional tariffs on India's exports to the US (though the reciprocal 25% tariff remains), following progress in US-Russia talks, as well as from S&P's upgrade of India's sovereign credit rating, the first in 18 years.
The government on Friday proposed to rationalize GST slabs into just two (5% and 18%) from the current four—5%, 12%, 18%, and 28%.
The proposal triggered a sharp rally in automobile stocks, with sentiment improving on expectations that the tax rate for automobiles could drop to 18% from the current 28%. Consumer durables also surged on hopes that lower taxes would revive growth in urban India.
The announcement will not be effective until the GST Council, which is chaired by the federal finance minister and has representatives from all states, gives a nod. A meeting is expected by October.
Nearly 100 Nifty 500 stocks end with gains between 3% and 9%
Among the top performers today, Maruti Suzuki led the rally, ending with a gain of 8.8% at ₹14,068, its biggest single-day spike in five years. It was followed by Hyundai Motor India, PG Electroplast, Amber Enterprises, and Ashok Leyland, each surging over 8%.
Other auto stocks such as TVS Motor Company, Hero MotoCorp, and Mahindra & Mahindra gained 6.8%, 5.9%, and 5%, respectively.
The strong rally across the auto pack pushed the Nifty Auto index to a 10-month high, with the index also registering a 7% gain so far in August. Among other notable Nifty 500 gainers were Blue Star, Pfizer, Godrej Industries, Endurance Technologies, KEC International, Bata India, Bikaji Foods International, and UNO Minda—all of which rose more than 5%.
In total, 97 stocks from the Nifty 500 closed the session with gains of over 3%.
Godfrey Phillips, Suzlon Energy, Sobha among 18 stocks that fell up to 5.2%
While the Indian stock market gained sharply, more than a dozen stocks closed the session lower, with Godfrey Phillips emerging as the top laggard, slipping 5.2% to ₹9,651 after reports suggested that the government may introduce a 40% GST category for select sin goods, including tobacco products.
Techno Electric & Engineering Company and Glenmark Pharmaceuticals were also among the top losers, dropping 3.6% and 3.5%, respectively. Suzlon Energy shares extended their decline for the fourth consecutive session, falling another 3.3% to ₹58.1. Hitachi Energy India and Craftsman Automation also came under selling pressure, each shedding 3%.
Other notable laggards included Sobha, Kalyan Jewellers India, Deepak Nitrite, Gravita India, Bayer Cropscience, Global Health, PVR Inox, Bharat Heavy Electricals, eClerx Services, Torrent Power, Abbott India, and Swan Energy, which fell between 2% and 2.6%.