Sensex Rises 1,109.10 Points as Debate on Indian Stock Taxes Revives

Key Facts

The Sensex closed up 1,109.10 points, or 1.54%, at 73,033.78 on Tuesday, October 27, 2026, while the Nifty 50 rose 358.60 points, or 1.6%, to 22,721.95. Gains followed comments by Finance Minister Nirmala Sitharaman that she was open to hearing market participants’ views on the long-term capital gains tax and securities transaction tax. The minister said discussion of taxes and the treatment of different asset classes was a "healthy debate," but her comments did not announce any specific change. India New England News reported that her remarks encouraged buying across several sectors. The two indexes’ rise reflected a response to the opening of the tax debate, without implying that a tax cut or change had been approved.

Sitharaman made the comments at the Bloomberg New Economy Forum in New Delhi on October 13, saying debate over the long-term capital gains and securities transaction taxes, as well as the treatment of different asset classes, was widely discussed. She said domestic and foreign investors were raising these issues, but declined to specify what the government might consider ahead of the next budget. She said preparations for the 2027-28 budget had begun and that she would be cautious in discussing what the government might consider. India levies a 12.5% tax on long-term capital gains, which arise when an asset is sold more than a year after it was purchased. The Indian Express quoted the minister as saying the debate did not amount to a pledge to cut or abolish the tax, while the government had announced no specific tax measure.

Technology stocks led Tuesday’s recovery, with HCL Technologies and Tata Consultancy Services among the Nifty’s top gainers, according to India New England News. Shriram Finance also posted strong gains, but participation in the rally varied among stock groups. The Nifty Midcap index rose 1.06%, while the Nifty Smallcap index posted a modest gain of 0.11%. By contrast, the Nifty Pharma index was the weakest sector and ended lower. The moves show that gains in the main indexes coincided with clear divergence among sectors and small-cap stocks.

The preliminary reading of the HSBC Composite Purchasing Managers’ Index rose to 56.7 in October from 55.9 in September, exceeding the Reuters poll average forecast of 56.1. The services activity index climbed to 56.2 from 55.2, making it the biggest driver of faster private-sector activity. Companies reported that export orders expanded at their fastest pace in six months, while input cost inflation slowed to its lowest level in about a year. But private-sector employment was unchanged in October, ending a nine-month growth run. The activity indicators point to supportive demand and exports, alongside a weaker signal from the labor market.

The gains followed a session in which Indian shares ended a four-session losing streak, supported by rises in Dr. Reddy’s, JSW Steel and Kotak Mahindra Bank after their results. Reuters reported that a news report about a possible cut in the long-term capital gains tax had supported sentiment at the time, but traders said sustaining the gains would require a concrete measure. Sitharaman’s October 13 comments had also sent the two indexes higher, with the Sensex closing up 1.5% and the Nifty 1.6%. That day, an analyst at SBI Capital Securities attributed part of the rise to short covering tied to contract expiry. This background shows that the tax debate has previously accompanied market gains, while its effect remained tied to expectations rather than an announced decision.

At the start of Tuesday’s trading, the two indexes were nearly flat as investors awaited the U.S. Federal Reserve’s decision later in the week. Reuters noted that Brent crude remained near a six-month high after attacks on Saudi Arabia dimmed hopes for an immediate easing of regional tensions and kept inflation concerns in focus. Shares then moved higher as buying broadened across several sectors, according to the report, which cited the closing gains. The next economic milestone is the release of September industrial production data, scheduled by India’s Ministry of Statistics for Wednesday, October 28. The index grew 8.0% year over year in August, compared with a 6.7% estimate for July, making the upcoming release a follow-up to the latest official reading on industrial activity.