Informist, Monday, Aug. 18, 2025

By Simran Rede

MUMBAI – The headline indices are likely to move upwards Tuesday after Monday's spike. Additionally, the market will take cues from US President Donald Trump's meeting with Ukranian counterpart Volodymyr Zelenskyy Monday. Zelenskyy and several European leaders are scheduled to meet Trump in Washington, DC, to map out a peace deal with Russia. This comes amid fears that Trump could try to pressurise Kyiv to accept a settlement favourable to Moscow.

Optimism around likely reform of the goods and services tax will continue to keep investor sentiment positive ahead of the meeting of three Groups of Ministers Wednesday and Thursday to work on the proposals. Prime Minister Narendra Modi had said Friday in his Independence Day address that GST on regular-use items would be lowered significantly. This will lower prices of such goods and also support domestic micro, small, and medium enterprises.

If implemented, this will boost consumption, which in turn will push up earnings growth across sectors and become a positive trigger for the market. An overhaul of the GST rate slabs, along with cuts in personal income tax, monetary policy easing, signs of a pickup in job growth, and improving real wages are likely to aid consumption in India, the agency Asian News International reported citing a Morgan Stanley report. Consumption is expected to improve in sectors such as staples, consumer discretionary goods, dairy, quick commerce, automobiles, and budget hotels, along with sectors such as cement, insurance, pharmaceuticals, and renewable solar panels.

Emkay Global Financial Services has raised its Nifty 50 target to 28000 points by September 2026 from the earlier estimate of 26000 points by March. The brokerage sees India's GST rationalisation being growth-accretive and a major market mover.

Monday, the Nifty 50 closed at 24876.95, up 245.65 points or 1%. The BSE Sensex ended at 81273.75, up 676.09 points or 0.8%. The 50-stock index is expected to face resistance at 24950-25000 levels. Rising above these levels and sustaining itself there may take the benchmark index towards 25200 points in the near term, Vipin Kumar, assistant vice-president and senior derivatives analyst at Globe Capital Market, said. He pegged the support for the index at 24650 points. "Intraday market movement will depend on Trump and Zelenskyy's meeting outcome," Kumar said.

The June quarter corporate earnings have broadly been in line with the Street's estimates, with the severity of earnings cuts moderating from previous quarters, though the trend of a higher number of downgrades continues into the September quarter, Motilal Oswal Financial Services said in a report. "EPS (earnings-per-share) growth for Nifty 50 is projected to rise to (about) 9% in FY26 (vs. an anemic 1% in FY25)--aided by a likely improvement in the macro environment owing to the stimulative fiscal and monetary measures," the broking firm said.

Consumer sentiment was also boosted by July's retail inflation hitting an eight-year low of 1.55%, driven by easing food prices. "A GST rate cut would also lower inflationary pressures and likely increase the probability of further monetary easing by the RBI," UBS said in a report. The brokerage expects the Reserve Bank of India to cut the repo rate to 5.00-5.25% range. "We maintain our view that there is space for 25-50 bps (basis points) rate cut in rest of FY26 to support growth," it said.

In August, foreign institutional investors have been net sellers, with their long positions at historic lows. "This created an oversold condition, ripe for a short-covering rally," Vinit Bolinjkar, head of research at Ventura Securities, said. "While some profit booking by domestic institutional investors is anticipated at higher levels, the overall trajectory remains positive." End

Edited by Rajeev Pai

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