Mumbai: Indian stock markets closed higher on Monday, lifted by strong performances in the auto and metals sectors as investors responded positively to the government’s sweeping Goods and Services Tax (GST) overhaul and global interest rate expectations.
The benchmark Nifty 50 index rose 0.28 percent to settle at 24,809.75, while the Sensex gained 0.26 percent to close at 80,922.34. Auto stocks led the rally after several manufacturers announced significant price cuts on their vehicles, reflecting the recent GST reductions. Tata Motors climbed 3.2 percent, while Mahindra & Mahindra surged nearly 9 percent, making it one of the biggest beneficiaries of the reforms.
The metals sector also strengthened after Morgan Stanley upgraded its outlook for major producers, including JSW Steel, Tata Steel and SAIL, which gained about 3 percent each. Mid-cap and small-cap indexes added 0.6 percent and 0.4 percent respectively, underscoring broad market optimism.
The Federation of Automobile Dealers Association (FADA) projected a strong festive season for the auto industry, citing the GST cuts as a major driver of consumer demand. Taxes on small cars and two-wheelers have been reduced from 28 percent to 18 percent, while the additional levy on large-engine cars and SUVs has been removed, cutting the effective tax rate to 40 percent. Car sales in August grew 2.84 percent year-on-year, but dealers expect stronger momentum once the revised rates come into effect on September 22.
Showroom inventory levels remain high, with vehicles staying unsold for an average of 56 days compared to the recommended 21 days. Still, FADA President C S Vigneshwar said the reforms would provide “policy tailwinds” and help trigger accelerated growth during the festive period.
Automakers including Hyundai, Tata Motors, Toyota and Mahindra have announced sweeping price cuts ranging from Rs 65,000 to nearly Rs 9 lakh across different models. The move is expected to attract buyers who had been delaying purchases in anticipation of lower taxes.
The broader GST reform, dubbed GST 2.0, has streamlined the tax structure into two main slabs of 5 percent and 18 percent, with a 40 percent rate reserved for select luxury items. Essential goods such as packaged food, medicines and insurance products have been moved into lower tax categories. Analysts estimate the changes could lower inflation by as much as 1.1 percentage points while boosting household consumption.
Global cues also supported Indian markets after weaker-than-expected US jobs data raised hopes of an interest rate cut by the Federal Reserve, improving sentiment for emerging market equities.
With festive demand approaching and GST reforms reshaping consumption patterns, analysts believe India’s auto and metals sectors are poised for sustained growth, though challenges such as high inventories and global economic uncertainties remain.