Sensex, Nifty: GST Council meet this week a stock market mover; here's why

Emkay Global in a fresh strategy note said the next big trigger for the stock market is GST 2.0, with the final contours expected on September 5. Calling it a major growth catalyst, Emkay Global said it expects an announcement on the new GST rates in the upcoming two-day GST Council meeting on September 3-4. 

Emkay Global said near-term worries persist in the market, but it remains constructive on a consumption revival cascading from multiple fiscal and monetary stimuli. It retained its Nifty target at 28,000 for September 2026, with discretionary and industrials as its key overweight sectors.

A potential earnings recovery from the GST and monetary stimuli would more than offset rising bond yields, which typically hurt earnings multiples, Emkay Global said.

“There is heavy news reporting on likely rates, with a three-tier structure (5 per cent, 12 per cent, 40 per cent with no cess) the likely outcome. Exact details on specific rates will only be clarified then. The key challenge will be to convince the state governments, as GST forms a large part of state revenue,” Emkay Global said.

The domestic brokerage believes that nearly 23 per cent of FY25 revenue receipts and 44 per cent of FY25 own tax revenue (OTR) put the fiscal deficits of states more at risk than those of the Centre. 

“We believe this will be a net fiscal expansion rather than a revenue-neutral rationalization, with the 40 per cent category remaining narrowly scoped,” it said. 

Emkay Global said the worst-case scenario for tariffs has played out, with the US imposing an effective 50 per cent tariff on imports from India as on 27-Aug-25. The direct hit appears to be contained at 0.5 per cent of GDP for FY26, with a negligible impact on earnings of listed equities. 

The second-order effects remain critical, it said.

They should be mitigated by potential government and RBI support. EMkay said the affected sectors employ 3 lakh workers, so mass layoffs potentially hurt consumption. 

“These are largely related to low-income jobs, hence mass segment consumption is more at risk. iii) There is a 1.2 per cent CAD risk and a potential spillover due to the short-term rupee weakness, especially if it is reinforced by FPI selling, which is already Rs 52,700 crore for Jul-Aug ’25,” Emkay said.