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As we reach midway of Q2, our domestic markets continue to navigate a complex landscape on account of geopolitical developments, policy shifts, and evolving economic indicators. The country’s growth forecast for CY 2025 and 2026 was upgraded to 6.4% (for both years) by the IMF, highlighting India’s enduring potential. There have also been other positive developments on the domestic front. The Goods and Services Tax (GST) Council recently announced significant rate reductions, simplifying the tax structure and providing relief to consumers and businesses alike. India’s structural strengths and the growing demand in the domestic market continue to make it a beacon of long-term growth. International markets have experienced uptrend in recent weeks as Japan, South Korea, and Taiwan reached record highs driven by optimism around artificial intelligence & technology sector. The US decision to impose a 50% blanket tariff on Indian-origin goods has impacted trade dynamics & markets in India remained somewhat subdued.

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Source of MF Industry Data: AMFI, Internal Research

Market Update

Tariffs and trade-related geopolitical issues continue to overhang the Indian market. This has resulted in Indian markets underperforming their global peers. The market ignored the real GDP growth for Q1 FY26 at 7.8% YoY, which was higher than the consensus estimate of 6.7%, accelerating from 7.4% in Q4 FY25. Further, the supply-side, or GVA, estimate was stronger than expected at 7.6% versus the consensus estimate of 6.4%. The tariff-related pessimism also overshadowed the GST rate rationalization.

The 56th GST Council approved GST rate rationalization, in a consensus decision, following the PM's Independence Day remarks on next-gen GST reforms, for the benefit of consumers. The key change is the rationalization of the current four-tiered tax rate structure into a two-rate structure with a standard rate of 18% and a merit rate of 5%, along with a special demerit rate of 40% for a selective few goods and services. The new GST rates on goods and services will be effective from 22 September 2025.

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Source of MF Industry Data: AMFI, Internal Research

Media Coverage

Articles, blog posts, and interviews in the media from the last month.