Nifty expands his losing series until August. Will GST conversations, cheerful GDP and Modi’s China visit the slide?

The Indian shares ended Augustus with a second consecutive month of losses, because the Nifty fell by 1.38% in a holiday channel and has registered its weakest stretch of two months since the beginning of 2023. The benchmark index has been weighed by American tariff shocks, foreign fund outflows and profit over the most important sectors. Investors are now confronted with a crucial week that could test whether strong domestic growth, tax reforms, and a diplomatic reset with China can breathe new life into Sentiment.

The Nifty 50 and Sesex each lost more than 2.2%last week, lowered by American rates on Indian goods. The United on 27 August doubled the tasks to 50% in response to the purchases of Russian oil from India, and feared the fear of stress in export-heavy industries from textile to metals and car.

“Indian shares ended lower this week, because early optimism was overshadowed by sustainable sale in the midst of rising global and domestic headwinds,” said Vinod Nair, head of research at Geojit Investments. He noted that “the subsequent imposition of rates on Indian goods trust further, driving profit booking between sectors. Large caps fell, while the middle and small caps are loser on stretched valuations and increased uncertainty.”

Foreign portfolio investors pulled around RS 527 billion from shares in July and August, so that the outflows were extended from muted income and rate-related risks. Brokerage Emkay Global said that the direct GDP of rates could be limited to approximately 0.5% of FY26, but warned of “significant second -order risks for quality and employment in the assets”.

GDP -fee offers a buffer

However, the Indian economy showed unexpected power in the quarter of June. GDP grew by 7.8% on an annual basis, well above the estimate of 6.7% and higher than the expansion of 7.4% in the previous quarter, noted Bofa Securities.

“The GDP growth of 7.8% for the first quarter of FY26 is encouraging and re -sees the resilience of the Indian economy in the light of the current tariff distust and regional wars,” said Ashwini Shami, President and Chief Portfolio Manager at reverse capital. Shami points to the growth of services of 9.3% and a 9.7% jumped into government stacking as the most important drivers. “The expected broadcast in domestic consumption, the Capex growth of the private sector and the ongoing growth in the formation of fixed capital will offer sustainable economic growth, which is a strong positive for the stock markets,” she said. Bofa said that the strong print “did everything but a rate reduction in October”, while maintaining its FY26 -BBP prediction at 6.5% because of the global risks of tariff and trade disguising.

GST Council -Meeting in Focus

The attention now focuses on the meeting of 3-4 September of the GST Council, where Minister of Finance Nirmala Sitharaman will chair the discussions about rationalizing the tax regime. Markets bet that a structure with three levels could arise, with consumption and automatic sectors that are seen as top beneficiaries.

“The next trigger is GST 2.0, with the final contours expected on 5-SEP-25: we see this as an important growth catalyst,” said Emkay Global, who confirmed his handy target of 28,000 before September 2026.

Nair of Geojit Investments said that consumption-driven sectors-“FMCG, sustainable, discretionary, cement and infrastructure” good positioned to take advantage of GST seasons and higher government spending.

Modi visits China

By adding a geopolitical dimension, Prime Minister Narendra Modi met Chinese President Xi Jinping in Beijing on Sunday in his first visit to China in seven years, on the sidelines of the Shanghai Cooperation Organization Summit.

“We are committed to continuing our relationships based on mutual respect, trust and sensitivities,” Modi told XI, according to a clip on his official X account.

The meeting comes only a few days after Washington had imposed the punitive rates, where analysts noted that Modi and XI want to present a united front against Western pressure.

Prospect

Market kepts expect that volatility will continue to exist in the short term, with domestic growth triggers compensated by external headwind. “A resolution of tariff disputes could act as an important catalyst for market sentiment, although the mutual rate of 25% is expected to remain in force on the almost medium term,” said Nair of Geojit Investments.

Whether robust GDP growth, tax reforms and geopolitical defrosts can outweigh the trade risks will be tested when the markets reopen in September. For now, Nifty’s slide has left investors left whether the domestic resilience story can overcome global turbulence.

Read also | RS 35,000 Crore Fii Selloff in August. Can GST reforms, rate lighting and a strong GDP print change the tide?

(Disclaimer: recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)