India announced a slew of changes in the tax structure imposed on fuels and vital commodities to help fight rising inflation.
Indian stocks closed lower on Monday after a volatile session led by sell-off in metal stocks after the government imposed heavy export tax on steel products, while gains in automobile stocks helped cover some losses.
The NSE Nifty 50 index was down 0.32% at 16,214.70, while the S&P BSE Sensex was down 0.07% at 54,288.61.
The Nifty Metal index, which saw its worst day since March 2020 in the session, ended 8.1% lower. JSW Steel and Tata Steel were the top losers in the Nifty 50 index, falling 13.2 and 12.6%, respectively.
India on Saturday announced a slew of changes in the tax structure imposed on fuel and vital goods to help fight rising inflation.
The country imposed an export tax of 15% on eight steel products, while steelmakers seek to meet local demand by increasing market share in Europe, whose supplies have been hit by Russia’s invasion of Ukraine.
S Ranganathan, Head of Research, LKP Securities, said: “In view of the tax cut on fuel to contain inflation, the possibilities of additional market borrowing by the Indian government emerged.”
However, Reserve Bank of India Governor Shaktikanta Das told CNBC-TV18 in an interview on Monday that the Indian government will stick to its fiscal deficit target specified in the budget and may not necessarily need to increase government borrowing just yet.
Vinod Nair, Head of Research, Geojit Financial Services, said, “The sharp monetary and fiscal measures adopted by the RBI and the government will have a cascading impact on the markets and the economy in the short to medium term.”
Nifty Auto index rose 1.8% as automakers benefited from lower input costs post tax changes. Maruti Suzuki India and Mahindra & Mahindra were the top losers on the Nifty 50, rising 4% each.
In individual stock moves, Divi’s Laboratories and TTK Healthcare Ltd fell 9.5% and 10.5%, respectively, after their quarterly results.
(Reporting by Rama Venkat in Bengaluru; Editing by Uttaresh V and Maju Samuel)
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