Mumbai, Jul 3 (PTI) Indian markets rejoiced at the far- reaching tax reform GST, sending the benchmark Sensex higher by over 300 points -- its biggest single-day surge in a month -- on emergence of a big rally in FMCG and auto counters.

The across-the-board buying helped the BSE flagship index close at a fresh one-week high of 31,221.62 and took the broader Nifty to finish 94 points higher at 9,615.

Overall business sentiment was buoyed by expectations that the implementation of the Goods and Services Tax (GST) will provide the much needed stimulant to the country's economic growth by transforming the earlier multi-pronged indirect taxation into a 'one nation one tax' system.

"Market welcomed the new tax regime with a positive note while shrugging off the initial hiccups of investors during the last couple of weeks where market witnessed consolidation.

Spending is likely to increase due to the impact of lower tax and increased sales volume will continue to benefit the earnings potential in the future," Vinod Nair, Head of Research, Geojit Financial Services Ltd, said.

The biggest tax reform since independence, the GST, was launched by Prime Minister Narendra Modi and catapults India into a select league of nations that have a single national sales tax.

Instilling optimism among investors, Moody's said the GST implementation will be positive for India's rating as it will lead to higher GDP growth and increased tax revenue.

Robust capital inflows from foreign institutional investors (FIIs) and positive global cues further supported the momentum.

Shares of the fast moving consumer goods (FMCG) firms led the rally, followed by telecom, metal, realty and auto counters.

Cigarette maker ITC was the top gainer in Sensex, rising 5.70 per cent to end at a 52-week high. This is mostly because taxation for cigarettes under the GST is around 5-6 per cent lower than the previous tax structure.

The 30-share Sensex resumed with a gap-up at 31,156.04 and touched a high of 31,258.33 and a low of 31,017.11 before concluding at 31,221.62, showing a smart rise of 300.01 points or 0.97 per cent.

Similarly, the NSE 50-share Nifty also finished with a solid gain of 94.10 points at 9,615 after briefly reclaiming a high of 9,624.00.

Foreign portfolio investors (FPIs) sold shares worth a net ₹ 160.48 crore last Friday, as per provisional data.

Domestic institutional investors (DIIs) bought shares worth a net ₹ 1,195.71 crore last Friday.

In the Asian region, financial markets in Japan, Hong Kong, South Korea, Taiwan and Singapore rose in the range of 0.02 per cent to 0.17 per cent.

European indices were also trading higher in their opening trade.

Among the other gainers at BSE, besides cigarette maker ITC, were Hero Motoco 2.17 per cent, Maruti 1.96 per cent, Coal India 1.95 per cent, Infy 1.68 per cent, Adani Ports 1.55 per cent, HUL 1.29 per cent, Asian Paints 1.27 per cent, M&M 1.21 per cent, ONGC 1.11 per cent, Tata Motor DVR 1.01 per cent and Tata Steel 0.93 per cent.

Among the laggards, NTPC fell by 1.17 per cent, Kotak Bank 0.72 per cent, Cipla 0.60 per cent, Sun Pharma 0.54 per cent and Lupin 0.50 per cent.

Sector-wise, MCG jumped 3.40 per cent, followed by telecom 1.86 per cent, metal 1.85 per cent, realty 1.48 per cent, auto 1.33 per cent, industrials 0.87 per cent and teck 0.86 per cent.

The S&P BSE Mid-Cap index rose 1.13 per cent and Small- Cap index gained 1.05 per cent. Both these indices outperformed the Sensex.

The market breadth remained positive as 1,788 stocks ended higher, 871 closed lower while 175 ruled steady.

The total turnover on BSE amounted to ₹ 3,189.86 crore, higher than turnover of ₹ 3,079.94 crore registered during the previous trading session

Goods and Services Tax spurs market rally as investors welcome unified national sales tax and growth prospects. Implementation of the Goods and Services Tax triggered a strong positive market reaction, with benchmark indices recording notable intraday gains and broad-based buying across sectors. Fast Moving Consumer Goods and autos led the rally, several large-cap stocks reached fresh highs, mid- and small-cap indices outperformed, and turnover increased, supported by domestic institutional buying and favourable global cues.