The Indian stock markets could see a major boost over the coming year as the government’s move to rationalize Goods and Services Tax (GST) is expected to lift growth and sentiment.
According to a report by Emkay Research, the Nifty 50 index could touch 28,000 by September 2026, with the brokerage firm upgrading its market outlook. The report described India’s GST rationalisation as a “growth-accretive, big-ticket reform” and said it is a major market mover.
It stated, “We see this as a major market mover and upgrade our Nifty target to 28,000 for Sep-26”. The report also highlighted the second-order benefits of the move. Rationalisation of GST is expected to accelerate the formalisation of the Indian economy and improve the competitiveness of domestic companies.
While the government could face some revenue losses in the short term, the believes the higher fiscal deficit is manageable. The firm added that growth accretion will cover the shortfall within the next two to three years.
Calling GST rationalisation a “rerating trigger for the market,” the report said this reform will have long-term growth benefits for the economy. It also revised its Nifty target to 28,000, based on an aggressive 20.7 times one-year forward price-to-earnings ratio, which is one standard deviation above the five-year average.
According to Emkay Research, the reform offsets near-term worries around weak growth and tepid earnings. The six-week market downtrend should now reverse as the earnings outlook improves and valuations start to reflect the broader positives of the move.
The report also highlighted sector preferences in light of GST changes. Emkay Research maintained an overweight stance on Consumer Discretionary and said it prefers small and mid-cap players in staples and cement within the materials space.
Separately, the report pointed out that the rating upgrade by S&P on 14 August 2025 is a timely recognition of India’s economic strength. S&P upgraded India’s sovereign rating to BBB, reflecting what the brokerage called a “fortress balance sheet.”
While India’s overseas debt stands at 19 per cent of GDP and is too small for the upgrade to bring material benefits, the recognition helps calm investor concerns about the impact of elevated US tariffs. The report pointed out that the upgrade also gives the government more flexibility to take fiscal risks linked to GST rationalisation.