Indian tax reform proposal boosts stock market, Nifty index expected to achieve its best performance in three months.

On Monday, India's main stock index rose more than 1%. This came after the government proposed a major overhaul of the complex goods and services tax system, which will lower prices for daily necessities and electronic products starting in October. A government official said on Friday that following Prime Minister Narendra Modi's announcement of the reform measures, the federal government will introduce a two-tier tax structure of 5% and 18%, replacing the previous 12% and 28% tax rates on certain goods. The Indian Nifty 50 index rose 1.51% to 25003.9 points, while the Mumbai Stock Exchange Sensex index rose 1.34% to 81682.61 points. If the upward trend continues, the Indian Mumbai Nifty index is expected to achieve its best single-day performance in three months, and the Indian Standard Index Sensex is also expected to achieve its best trading day performance in two months. The index covering small-cap stocks in India and the index covering mid-cap stocks both rose by about 1.3% and 1.5%, respectively. All 16 major sectors are showing upward trends, with the automotive sector rising by 4.5% and the consumer goods sector rising by 2%. As part of the reform, a source in the Indian government said on Monday that India has proposed lowering the goods and services tax on small cars from 28% to 18%. Citigroup research company stated that lower rates will help boost overall demand and earnings expectations for the fiscal year 2027.