Proposed GST Reforms and Trump-Putin Summit Likely to Drive Indian Markets This Week

Overview of Last Week’s Market Performance

The Indian stock market recently ended a six-week losing streak, showing signs of recovery. The Sensex closed at 80,597.66 points, up 57.75 points (+0.07%), while the Nifty 50 rose by 11.95 points (+0.05%) to 24,631.30. The Nifty Midcap and Smallcap indices saw slight declines of 0.31% and 0.42%, respectively, whereas the Nifty Bank and Nifty IT indices gained 0.29% and 0.40%, driven by strong sector-specific buying.

Foreign Institutional Investors (FIIs) sold nearly ₹10,000 crore in the cash market, while Domestic Institutional Investors (DIIs) countered with purchases worth ₹19,000 crore. Despite foreign outflows, positive global cues and macroeconomic optimism supported the recovery.

Key Factors Influencing Markets This Week

Several domestic and global factors are likely to drive Indian equity markets from August 18 to 22, 2025:

1. Proposed GST Reforms by Diwali

Prime Minister Narendra Modi announced plans for big bang reforms in the GST regime by Diwali. These reforms aim to:

• Simplify the current GST framework.
• Reduce compliance issues.
• Lower the prices of everyday items.
• Resolve disputes arising from tax evasion and litigation.

Analysts believe that these reforms will provide a boost to market sentiment, as investors anticipate increased consumption and corporate earnings growth in the coming months.

Expert Insight:
“The week ahead is likely to start on a cheerful note, as markets draw optimism from PM Modi’s Independence Day address. The proposed GST rate reductions could lift equities out of the bear grip,” says Santosh Meena, Head of Research at Swastika Investmart.

2. Impact of Trump-Putin Summit

The Trump-Putin summit in Alaska ended without a ceasefire deal, but it has still influenced investor sentiment.

• Markets reacted positively to the news that no additional sanctions on Russia are expected, which reduces global trade tensions.
• Analysts note that easing geopolitical tensions can potentially support a relief rally in Indian equities, especially if the secondary tariff of 25% imposed on India is reconsidered.

Expert Opinion:
“A possible truce between the US and Russia may trigger a relief rally. India stands to benefit significantly if tensions ease, particularly through improved global trade conditions,” says Ajay Bagga, market analyst.

3. S&P Upgrade of India’s Sovereign Credit Rating

On Thursday, August 14, 2025, S&P Global upgraded India’s sovereign credit rating from BBB- to BBB, citing:

• Robust economic growth.
• Political commitment to fiscal consolidation.
• Conducive monetary policy aimed at controlling inflation.

This upgrade is expected to attract foreign investors, support FIIs inflows, and provide confidence in the long-term economic trajectory of India.

4. Global Macroeconomic Cues

Market sentiment will also depend on:

• US Federal Reserve meeting minutes.
• Upcoming US macroeconomic data.
• Crude oil price movements and currency fluctuations.

Global developments often impact foreign investors’ trading activity, which in turn influences domestic market trends.

Technical Outlook: Sensex and Nifty

Nifty 50 Index Forecast

• Support Levels: 24,337
• Resistance Levels: 24,660 and 24,850
• Potential Rally Target: 25,000

The Nifty index has formed a bullish base at 24,350 and exhibits a bullish engulfing pattern on the weekly chart. If it holds above the key support, upward momentum could continue.

Scenario Analysis:

• Bullish Case: Holding above 24,337 could see Nifty testing 24,750–25,000 zones.
• Bearish Case: Falling below 24,337 may trigger selling pressure, pushing Nifty towards 24,200.

Sensex Outlook

The Sensex is expected to move in tandem with Nifty, with support near 80,000 points and potential resistance around 81,200 points. Key sectoral movers include Banking, IT, and FMCG stocks.

Sectoral Highlights

1. Banking Sector

The Nifty Bank index rose by 0.29%, reflecting strong buying in large private and public sector banks. Bank stocks are likely to remain in focus due to expected policy rate announcements and robust quarterly earnings.

2. IT Sector

The Nifty IT index gained 0.40%, driven by optimism over global IT spending and dollar revenue growth. Major IT firms may see gains if currency trends remain favorable.

3. FMCG and Consumer Goods

Proposed GST reforms are expected to directly benefit FMCG companies, as lower tax rates can increase consumption, improve margins, and reduce pricing pressure.

Corporate Actions and IPO Activity

This week, around 100 companies are expected to announce corporate actions such as dividends and stock splits. Notable companies include:

• JK Paper
• Natco Pharma
• Coal India

Additionally, the Indian primary market is likely to witness five mainboard IPOs and one SME issue, attracting investor interest.

FII and DII Activity

• FIIs: Likely to remain cautious, influenced by global cues and geopolitical developments.
• DIIs: Expected to continue supporting domestic markets through targeted purchases.

Analysts suggest that strong DII activity can help stabilize the market, even if foreign flows are volatile.

Market Risks to Watch

1. Geopolitical Tensions

Despite a positive outlook, unforeseen geopolitical developments could create short-term volatility. Investors are advised to monitor:

• US-China trade dynamics.
• Middle East tensions.
• Russia-related sanctions and agreements.

2. Inflation and Monetary Policy

Although S&P highlighted India’s conducive monetary environment, unexpected inflation spikes could influence RBI policy and impact market sentiment.

3. Corporate Earnings

Mixed earnings results could create sector-specific volatility. Investors should focus on companies with strong fundamentals and consistent growth trajectory.

The Indian stock market is poised for cautious gains this week, backed by:

• Proposed GST reforms aimed at reducing taxes and boosting consumption.
• Positive sentiment from the Trump-Putin summit easing global trade fears.
• S&P’s sovereign credit rating upgrade, enhancing investor confidence.
• Stable macro-economic conditions and DII support.

While optimism prevails, investors must remain cautious about geopolitical risks, foreign portfolio flows, and short-term market volatility. Nifty and Sensex are expected to trade in a bullish range as long as key support levels hold.