Indian equities rose sharply on Monday, taking benchmark indices to their highest levels in nearly two months as stronger-than-expected earnings from Reliance Industries, falling crude oil prices and expectations of tax relief for equity investors improved market sentiment.
The Nifty 50 advanced 1.68% to 23,440.80, while the BSE Sensex gained 1.66% to close at 75,692.78. Both indices have climbed 3.3% over three consecutive sessions, extending a recovery supported by domestic corporate earnings and improving macroeconomic indicators.
Reliance Industries was the biggest contributor to the rally, with its shares surging 11.6%, their strongest single-day performance since April 2020. The gains followed quarterly profit that exceeded market expectations, helping the conglomerate account for approximately half of the Nifty 50’s advance on Monday.
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Investor sentiment also received support from a decline in Brent crude prices to $109 per barrel from a six-month high of $118 on Friday. The retreat followed talks involving Iranian and Qatari officials aimed at securing an agreement to end the US-Israeli war on Iran.
The prospect of lower oil prices is very important for India, one of the world’s largest crude importers. Higher oil prices increase the country’s import bill, put pressure on inflation and can weaken the rupee, while also raising costs for businesses and consumers.
Expectations of changes to capital gains taxation provided another source of optimism. Reuters reported, citing sources, that India’s markets regulator had recommended removing long-term capital gains tax for foreign investors and domestic mutual fund investors who sell existing mutual fund holdings to invest in new ones.
The proposal, if adopted, could improve the attractiveness of Indian equities by reducing the tax burden on certain investment transactions. However, the recommendation does not amount to an approved policy change.
Reliance Industries’ rally was the central driver of Monday’s market performance. The company’s quarterly earnings exceeded analyst expectations, prompting investors to reassess a stock that had underperformed the broader market for much of the year.
VK Vijayakumar, chief investment strategist at Geojit Investments, said the company’s earlier weakness had amplified the reaction to its latest results.
“The underperformance in Reliance’s shares so far this year has amplified the gains in the stock today after robust quarterly earnings,” Vijayakumar said.
Even after Monday’s advance, Reliance shares remained down 17.2% in 2026, indicating that the latest rally has not erased the losses accumulated earlier in the year.
The company’s importance to the benchmark index also meant that its gains had an outsized influence on the broader market. Its contribution of roughly half of the Nifty 50’s advance suggests that Monday’s rally was heavily concentrated in one large-cap stock, even though most major sectors also ended higher.
Thirteen of the 16 major sectoral indices recorded gains. The broader mid-cap index rose 1.2%, while the small-cap index advanced 0.7%, showing that buying interest extended beyond the largest listed companies.
Automobile stocks also supported the market. The Nifty Auto index gained 1.3%, with Maruti Suzuki rising 2.4% and Tata Motors Passenger Vehicle adding 2.6% as investors positioned for monthly sales figures.
The performance of automobile shares reflects expectations that domestic demand could remain resilient, supported by vehicle purchases and broader economic activity.
Lower Oil Prices and Tax Expectations Support Investors
The decline in crude prices provided a broader macroeconomic boost. Brent crude fell to $109 per barrel after reaching $118 on Friday, as diplomatic discussions involving Iranian and Qatari officials continued for a third consecutive day.
But the movement in oil prices has implications beyond energy companies for India. A sustained decline could reduce the country’s import costs, ease pressure on the current account and provide some relief to inflation. It could also improve the operating environment for industries that depend heavily on fuel and petroleum-based inputs.
However, the geopolitical situation remains a major source of uncertainty. The decline in prices followed renewed diplomatic activity, but the durability of the move will be determined by whether negotiations produce a lasting agreement and reduce risks to regional energy supplies.
Vijayakumar said domestic economic indicators were also supporting equities despite international pressures.
He pointed to goods and services tax collections, loan growth and automobile sales as signs of resilience in India’s economy. These indicators have helped reinforce expectations that domestic demand can provide support to corporate earnings even when global conditions remain difficult.
The proposed capital gains tax changes added another potential catalyst. According to Reuters, the markets regulator recommended removing the long-term capital gains tax for foreign investors and domestic mutual fund investors switching from existing mutual funds into new ones.
The recommendation is not yet a confirmed tax reform. Investors will need to wait for a government decision and details of how any change would be implemented before incorporating it fully into investment expectations.
The market’s gains were broad but not universal. The Nifty IT index fell 0.5%, with investors apparently taking a pause after the sector’s nearly 18% advance last month.
The decline suggests some profit-taking following a strong run rather than a broad deterioration in market sentiment. Technology stocks have also faced questions about global demand, corporate spending and the outlook for major technology customers.
Monday’s performance therefore reflected different forces across the Indian market. Reliance earnings and lower oil prices supported large-cap stocks, while domestic economic indicators helped mid-cap and small-cap shares. Technology stocks, meanwhile, retreated after their recent gains.