The Indian stock market starts a new week with a mixture of regulatory, global, and macroeconomic factors influencing sentiment and sectoral action.
Here is what the investor community needs to monitor:
GST Rate Rationalisation
The removal of the indirect tax regime by GST Council, converging the four slabs to two rates of 5% and 18%, will face final scrutiny this week, with implementation likely by Diwali. The majority of goods in the 12% slab are expected to shift to 5%, giving relief to consumers and MSMEs, and potentially increasing consumption. A 40% slab, though, will be kept for special items, providing a fiscal cushion. Segments that would gain from a reduced GST- FMCG, retail, auto parts, may witness increased demand.
50% US Tariff on Indian Exports & US Trade Team Cancellation
The introduction of a 50% tariff on Indian exports to the US (from August 27) is a challenge for the textile, gems, jewellery, chemical, and leather industries, since they are extremely US demand-sensitive. Engineering exports alone could fall $4–5 billion, with headline GDP growth experiencing downward pressure. The calling off of the US trade team visit to negotiate BTA puts any short-term expectations of tariff relief on hold, suppressing appetite in the market for vulnerable sectors even as export numbers have turned positive in recent months.
Powell’s Jackson Hole Speech
Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole Symposium (Aug 22) is expected to chart the course of US monetary policy. Market expectations are in favour of a possible rate cut in September, prompted by worries of tariffs stoking inflation and a weakening job market. A dovish or hawkish tone will influence global liquidity and risk appetite, Indian equities may witness FII flows swinging based on the Fed’s forward guidance.
IPO Momentum & SEBI Developments
The primary market is active, with high-profile IPOs such as Highway Infrastructure and NSDL recording strong listing gains (up to 77% in the case of Highway Infrastructure). Some SME IPOs inject liveliness in various sectors like aviation, plastics, and engineering. At the same time, **SEBI is pushing regulatory changes** such as tightened inspection norms and strategic investor definitions for REITs. Its annual report pushes for market transparency and supervisory efficiency, probably enhancing investor confidence.
FII & DII Trends
Foreign investors (FIIs) have been net sellers, withdrawing ₹24,191 cr in August, indicative of prudence in the face of worldwide uncertainties. Domestic institutional investors (DIIs) are still supportive, with net buying of ₹55,795 cr during the month, absorbing market volatility and indicating confidence in home fundamentals.
Dropping Rupee Against the USD
The Indian rupee declined sharply to 87.51/USD, down 1.91% this month and 4.34% year-to-date, a record low. Factors include the US tariff shock, hopes of imported inflation, and FIIs outflows. Heavy foreign debt-exposed companies are vulnerable, and import-based industries can transfer costs to consumers.
What to Watch
- US export-exposed sectors (textiles, gems) will be under pressure.
- Domestic consumption-oriented stocks may surge on GST reforms.
- Currency-sensitive businesses and companies with foreign borrowings must be watched carefully.
- IPO activity and regulatory changes can continue to draw retail attention.
Investors must prepare for volatility as global policy signals, trade tensions, and domestic reforms craft an ever-changing scenario. Stock picking and allocation to sectors that withstand turmoil will be the key to coping with uncertainties.
