Gift Nifty indicated a strong opening for Indian equities on Monday, buoyed by Prime Minister Narendra Modi’s Independence Day announcements on GST reforms and S&P’s upgrade of India’s sovereign rating to BBB from BBB-. The index stood at 24,890, suggesting a gain of over 200 points on Nifty.
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Gift Nifty indicates that the market on Monday may welcome GST reform announcements made by Prime Minister Narendra Modi in his Independence Day speech on Friday, despite the US President Donald Trump’s tariff pressure continuing to linger. Global rating major S&P’s upgrade of India will also catalyse the mood in favour of bulls. Gift Nifty 24,890 signals a gain of over 200 points for Nifty at open. Analysts expect the momentum to shift toward beaten-down stocks, even as they await the fine print of the GST rate proposals.
Much-needed structural reform
Karthik Mani, Partner, Indirect Tax at BDO India, said: The announcements for structural reforms in GST are quite welcome, with many of the pain points of the industry, such as registration related issues, addressing the inverted structure and resolution of classification related disputes, etc., set to be addressed along with one of the biggest demands of rate rationalisation and reduction in tax rate slabs.
“These are some of the headline level changes and it is hoped that all the points which have been raised by the industry over a period of 8 years (e.g. liberalisation of ITC provisions and ease of claiming refunds etc), would be addressed in a major revamp of the GST law, making it a true GST 2.0 exercise,” he said adding that while news reports suggest that the goods and services currently covered 12% slab would be transferred to 5% rate (for all the goods and services of essential consumption) and balance in 18%, it would also be important to ensure that such rate reduction results in effective reduction in prices of the products. “As always, the fine print would be important to examine but the announcement points towards the action being taken in the right direction,” he further said.
S&P upgrade: a long overdue
Welcoming Standard & Poor’s upgrade, Emkay Global Research said India finally received a long-awaited rating upgrade, with S&P raising India’s long-term sovereign credit rating to BBB from BBB-, while maintaining a stable outlook.
“India’s GST rationalisation is growth-accretive, big-ticket reform. We see this as a major market mover and upgrade our Nifty target to 28,000 for Sep-26, while recommending investors to play this through Autos and Cement. The second-order benefits are key: this speeds up formalisation of the economy and improves competitiveness of Indian companies. We think the government should absorb the revenue loss through the higher deficit, as the growth accretion will cover the shortfall within 2-3 years,” it added.
‘Near-term pressure’
Vinay Paharia, CIO, PGIM India Mutual Fund, said that in the near term, relatively higher tariffs imposed by the US on Indian exports, along with weaker-than-expected corporate earnings reports, may induce volatility in the markets. “For the former, we believe, it is the relative attractiveness between competing nations that would determine which countries would be the net beneficiary in the tariff regime,” he said, adding that: We believe India’s equity markets are navigating a complex landscape marked by strong long-term macroeconomic fundamentals and emerging valuation concerns in certain pockets. Such elevated valuations—especially in narrative-driven stocks—are prompting a style rotation toward high-quality and growth-oriented companies.”
While long-term prospects remain optimistic—driven by resilient earnings, policy stability, and demographic tailwinds, he said the MF would focus on fundamentals like cash flow generation, capital allocation and relative valuations to navigate near-term volatility.
Meanwhile, the aggressive selling by foreign portfolio investors continues to hurt sentiment.
FPI selling
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd., said: “India has been underperforming most markets over the last six weeks.“ This underperformance is despite the massive DII buying aided by robust inflows into mutual funds. In August, from the 1st through the 14th, FIIs sold equity worth Rs 24,190 crores through the exchanges. This FII selling has been completely eclipsed by the massive DII buying of Rs 55790 crores. Yet, Nifty has drifted down from 24,768 to 24,631.
“Trump’s harsh tariffs and the straining of relations between US and India have impacted the market sentiments and, consequently, shorts have piled up pulling the market down. The tepid earnings growth, elevated valuations and modest projection of 8 to 10% earnings growth for FY26 have emboldened the bears to increase short positions, impacting the market,” he said.
Sustained FII selling in IT stocks has pulled the IT index down. Banking and financials continue to be relatively resilient due to fair valuations and institutional buying, he further added.
Going forward, the FII activity will be influenced by the action on the tariff front, said Vijayakumar. “Latest news of easing of tensions between the US and Russia and no further sanctions on Russia indicate that the secondary tariff of 25% imposed on India is unlikely to come into effect after August 27th. This is a positive. Another positive factor which can influence FII behaviour is the rating agency S&P raising India’s credit rating from BBB-to BBB.”
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Published on August 18, 2025
