Bull vs bear: The Indian stock market witnessed strong buying during Thursday’s Opening Bell session after the announcement of GST reforms on Wednesday evening. However, the spike in the key benchmark indices was short-lived as profit-booking triggered in the second half, paring most of the morning gains. This put doubt among bulls, who were expecting a revival in the Indian stock market post-GST overhaul.
According to stock market experts, today, the Indian stock market falls among the worst performers (both YTD and YoY). Among the key benchmark indices, the Nifty 50 index has lost 0.45% in one year, while it has gained 4.20% in YTD. The BSE Sensex has shed 0.58% in one year, and the 30-stock index has gained 2.81% YTD. While the Indian stock market has been reeling under pressure, some indices of the global markets have outperformed Dalal Street by a considerable margin. In the last year, the Hang Seng Index has risen by around 48%, the Shanghai Composite Index has surged by more than 37.50%, and the South Korean Kospi has increased by over 25%.
In the US markets, the tech-heavy NASDAQ index has risen over 26% in one year, while the S&P 500 index has risen around 18%. The Dow Jones has increased by over 11% in one year.
Speaking on the GST reforms’ impact on the Indian stock market, Avinash Gorakshkar, a SEBI-registered fundamental analyst, said, “GST reforms are a right step taken by the central government to boost Dalal Street bulls, which have been hit severely by Trump’s tariffs on India. As new GST taxes are being implemented from 22 September 2025, their impact on the Q2FY26 results will be minimal. In the future, we can expect that Q3FY26 and Q4FY26 results will be better in comparison to Q1FY26 and Q2FY26 results. In other words, we are expecting H-2FY26 results to be better than H-1FY26. However, much will depend upon the trade pattern of FIIs. If they continue to sell Indian stocks, then GST reforms may end up providing resilience against the FIIs selling. If FIIs turn net buyers, then in that case, bulls may expect to outperform bears in the Indian stock market.”
Can Dalal Street bulls overcome bears?
Speaking on how GST reforms may impact the Indian economy, Seema Srivastava, Senior Research Analyst at SMC Global Securities, said, “India’s recent GST reform, featuring a streamlined two-slab structure and ₹. 48,000 crore in headline tax cuts, is designed to stimulate consumption and simplify compliance. By lowering tax rates, consumer prices fall, demand is boosted, and corporate margins are improved across key sectors like automobiles, FMCG, cement, insurance, and apparel. This should directly enhance earnings and equity valuations. Small and medium enterprises stand to benefit from reduced working capital lockups and lower informal compliance costs, encouraging formalisation and expanding the tax base over time. These changes offer a productivity boost for listed suppliers and distributors, and if companies reinvest their savings, it could support durable capital expenditure and improve investment sentiment.”
“GST reform, through rate reductions and slab simplification, is a powerful catalyst that can trigger a revival in the Indian stock market by boosting mass-consumption sectors such as autos, FMCG, and consumer durables. This stimulates household spending, lifts corporate earnings, and has already sparked significant market rallies. However, while these reforms act as a sentiment booster and may add over 1% to GDP, sustained outperformance requires more: fiscal discipline and favourable global conditions are vital,” said Akshat Garg, AVP, Choice Wealth.
FIIs’ trade pattern in focus
Highlighting the importance of FIIs’ trade pattern post-GST reforms, Rajkumar Singhal, CEO, Quest Investment Advisor, said, “The equity markets are also driven by global risk appetite, FII flows, interest-rate cycles, and valuation discipline. India’s relative underperformance this year has been more a function of stretched valuations and global uncertainties on top of weak earnings. If GST-led reforms translate into sustained earnings upgrades, especially in domestic consumption and MSME-linked sectors, it could help narrow that performance gap. In our view, GST 2.0 is a structural positive, and it certainly tilts the balance towards stronger medium-term returns for Indian equities.”
Ross Maxwell, Global Strategy Lead at VT Markets, said, “Foreign investors have been active on the selling front, redeploying their funds to cheaper markets like Taiwan, South Korea, and China, which also provide them access to fast-growing domains such as artificial intelligence. At the same time, the United States levies up to 50% on Indian exports, which have been hurting Indian export avenues.”
Q3, Q4 results in focus
“In India, muted urban spending and cautious corporate sentiment are causing the market to soften. Although GDP growth is still strong, corporate profits have been weak, and high valuations make India relatively expensive against the rest of the Asian markets. In the medium term, the story of Indian growth remains promising; nonetheless, to see a meaningful stock market recovery, it is necessary to achieve better earnings and more rational valuations, beyond just the implementation of GST reforms,” Ross Maxwell said.
Other triggers that matter
“External macroeconomic headwinds such as foreign fund outflows, weak IT earnings, global interest rate shifts, and geopolitical tensions could overshadow domestic gains. Fiscal trade-offs also matter: states may face revenue shortfalls, requiring compensation or spending cuts. If fiscal consolidation weakens, rising bond yields could offset equity market gains. The success of the reform depends heavily on execution, whether firms pass on tax cuts to consumers and whether compliance improves. The expected demand surge may be muted if the pass-through weakens, limiting GDP uplift. Overall, the GST overhaul strengthens India’s structural economic health and offers a cyclical boost to consumption-sensitive sectors,” said Seema Srivastava of SMC Global Securities.
Seema Srivasta said that GST reforms could support market performance in the next 6 to 18 months. Yet, for a sustained re-rating of Indian equities and a move out of the “worst performer” bracket, the reform must be accompanied by consistent earnings upgrades, stable foreign inflows, and continued macroeconomic stability.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
