GST Reform Sparks Optimism for India's Stock Market Growth

The Indian stock market is set to receive a significant boost from GST rationalization, raising growth expectations and investor sentiment. Emkay Research predicts the Nifty 50 index could hit 28,000 by September 2026. The reform is expected to enhance the competitiveness of domestic companies despite short-term fiscal challenges.

The Indian stock market is poised for a transformative year ahead, as the government's initiative to rationalize the Goods and Services Tax (GST) is projected to significantly bolster growth and investor sentiment. Emkay Research has revised its outlook, suggesting the Nifty 50 index might reach 28,000 by September 2026.

Described as a 'growth-accretive, big-ticket reform,' the GST rationalization is perceived as a substantial market driver. Emkay Research upgraded its Nifty target to 28,000 for September 2026, recognizing the reform's potential second-order benefits such as accelerated economic formalization and enhanced competitiveness of domestic companies, despite potential short-term revenue losses.

The GST reform is seen as a 'rerating trigger for the market,' with expectations of long-term growth benefits for India's economy. Emkay also noted the reform mitigates concerns over weak growth and sluggish earnings, with sector preferences leaning toward Consumer Discretionary and smaller mid-cap players in staples and the cement sector within the materials space.

Additionally, the report underscored S&P's sovereign rating upgrade on 14 August 2025 as a timely acknowledgment of India's economic resilience. This upgrade to BBB reflects a 'fortress balance sheet,' allaying investor concerns and giving the government flexibility to take fiscal risks associated with GST rationalization.

(With inputs from agencies.)