Sensex, Nifty extend gains on FM Sitharaman's LTCG tax, STT remark

Benchmark indices Sensex and Nifty extended morning gains in the afternoon session today after FM Nirmala Sitharaman said the government would keenly hear views on demand for removal of LTCG tax. The FM also said it was healthy to have a debate on STT. The FM was speaking at the Bloomberg Economic Forum.

Sensex zoomed 930 points to 72,854 and Nifty rose 295 points to 22,658. Earlier, Sensex was trading nearly 500 points higher and Nifty gained 200 points before FM's comments.

The FM said that long-term capital gains tax remains a subject of debate among domestic and foreign investors. Securities transaction tax and capital gains tax have both featured in discussions on India's market taxation. Debate continues on ensuring parity in taxation across asset classes.

Aligning tax treatment across asset classes was intended to bring them at par, not simply to increase taxes, she added.

ALSO WATCH: LTCG Tax To Be Scrapped? FM Sitharaman Open To Suggestions | Bloomberg Forum 2026

Meanwhile, brokerage SBI Research has called for abolishing long-term capital gains (LTCG) tax on equities. It is also in favour of extending the holding period to 2-3 years from the prevailing one year to anchor hot money flows into the equity market.

In its latest Ecowrap report, SBI Research said that while the RBI has been taking all possible steps to navigate an increasingly challenging global environment, the government also needs to urgently address long-pending structural issues affecting capital inflows.

Why market is rising today 

India VIX, the NSE's volatility index, slipped 8% in the afternoon session today. The fall in India VIX came after Indian market rallied on the back of a fall in brent crude prices, rally in IT stocks and IMF raising India's growth forecast. 
 
Brent crude prices fell on Tuesday, snapping three days of gain. Brent crude fell below $106 a barrel in Asian trade after rising over 6% over the previous three sessions. It hit a high over $107 in the previous day's trading before falling to $105.87. Benchmark US crude was also down 1.5% to $92.34 a barrel.

A rally in IT stocks was led by earnings of HCL Technologies. The IT stock zoomed over 8% to Rs 1321.55. Other IT peers such as TCS, Tech Mahindra and Infosys also rose up to 6% and were the top gainers on both Sensex and Nifty.

Another factor, which led to a sentimental boost in the IT stocks was a selloff in South Korea's Kospi 
led by a crash in Samsung Electronics and SK Hynix. Investor concerns over the sustainability of the AI-driven rally have weighed on sentiment, clouding the outlook for memory chipmakers.

International Monetary Fund (IMF) expressing confidence in India’s growth trajectory also boosted market sentiment. The IMF raised its forecast for the financial year 2026-27 to 7 per cent, up from an earlier estimate of 6.4 per cent made in July. The improved outlook indicates that domestic demand and robust services activity are contributing significantly to the economy’s resilience, despite increasing global uncertainties.