GST reforms to boost stock markets; Nifty50 could reach 28,000 by September 2026: Report

The stock markets could have significant advancement in the upcoming year, driven by the government's GST rationalisation initiative, which is anticipated to enhance economic growth and market sentiment.Emkay Research's analysis, cited by news agency ANI, suggests the Nifty 50 index could reach 28,000 by September 2026, leading the brokerage firm to revise its market outlook upwards.The analysis characterises India's GST rationalisation as a "growth-accretive, big-ticket reform" and identifies it as a crucial market catalyst. "We see this as a major market mover and upgrade our Nifty target to 28,000 for Sep-26," stated the report.Additional benefits outlined in the report include accelerated formalisation of the Indian economy and enhanced competitiveness of domestic enterprises through GST rationalisation.Despite potential short-term revenue reductions for the government, the research indicates the increased fiscal deficit remains controllable, with growth additions expected to address the gap within two to three years.The report identifies GST rationalisation as a "rerating trigger for the market".

emphasising its enduring positive impact on economic growth.The revised Nifty target of 28,000 is based on a forward price-to-earnings ratio of 20.7 times, positioned one standard deviation above the five-year average.Emkay Research suggests this reform addresses immediate concerns regarding sluggish growth and modest earnings, anticipating a reversal in the six-week market decline as earnings prospects improve.Regarding sector allocation, the report maintains an overweight position in Consumer Discretionary, favouring small and mid-cap organisations in staples and cement within materials.Additionally, the report noted S&P's rating upgrade on August 14 to BBB as timely acknowledgment of India's economic robustness, reflecting what the analysts term a "fortress balance sheet".Whilst India's foreign debt at 19 per cent of GDP limits the upgrade's tangible benefits, it helps alleviate investor worries regarding elevated US tariff impacts.