India’s equity benchmarks trim gains as Reliance, IT stocks slide

India’s benchmarks gave up most of their early gains on Thursday, as Reliance Industries slid after higher tax rates on oil-related services and IT shares extended losses on U.S. tariff concerns, offsetting the optimism from domestic tax cuts.

The NSE Nifty 50 ended 0.08% higher at 24,734.3 and the BSE Sensex added 0.19% to 80,718.01. They had risen as much as 1.1% earlier in the session.

On Wednesday, the Goods and Services Taxes (GST) Council approved a shift to a two-rate structure from the existing four and cut levies on everyday items, aimed at reviving domestic demand and cushioning the blow from steep U.S. tariffs.

Energy stocks fell 1% after the government said oil and gas exploration, production, and pipeline services would move to the 18% slab from 12%.

Reliance Industries slid 1%, becoming the biggest drag on the indexes.

Information technology stocks fell 0.9%, registering their third consecutive session of losses.

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The impact of the United States’ growth volatility from the tariffs on the IT sector is not clear and the segment will bear the brunt of this uncertainty, said Pankaj Pandey, head of retail research at ICICI Securities.

Seven of the 16 major sectors climbed. Financials gained 0.5%. Auto and consumer goods companies climbed 0.9% and 0.2%, respectively, on hopes that lower GST rates will spur spending.

The reform brought taxes on toothpaste and shampoo down to 5% from 18%, while small cars, air conditioners and televisions moved to 18% from 28%.

Mahindra & Mahindra jumped 6%. Consumer companies including Britannia, Colgate Palmolive India and Emami rose between 2.9% and 4.2%.

The government estimates the tax reform will cause a revenue loss of 480 billion rupees ($5.5 billion), lower than economists’ estimate of 1 trillion to 1.8 trillion rupees.

The GST reforms are positive, but foreign investors weigh more than just local policy as U.S. rates, dollar strength and global risk appetite remain key drivers of flows, said Ross Maxwell, global strategy lead at VT Markets.

Foreign institutional investors (FIIs) sold $4 billion of Indian equities in August and more than $1 billion in the first three sessions of September.

Broader mid-caps and small-caps fell about 0.7% each, after rising about 3% in last three sessions.