Nifty 50 At 28,000 By 2026? How GST 2.0 May Power The Next Market Rally

Brokerage firm Emkay Research has set a September 2026 target of 28,000 for the Nifty 50, riding on the back of the government’s sweeping GST 2.0 reforms. The index, which currently trades at 24,580, is expected to benefit from stronger consumption demand, sectoral upgrades, and broader economic formalisation.

“India’s earnings cycle is bottoming out and this could be the catalyst for an upgrade cycle to kick in,” Emkay analysts Seshadri Sen and Chirag Jain wrote in a September 3 note.

GST 2.0: A “Game-Changing” Reform
Unlike previous tweaks, GST 2.0 is being viewed as a structural reset. Analysts estimate a 0.5% of GDP fiscal impulse in FY27, with consumption, formalisation, and reduced regulatory burdens driving the shift.

“We expect GST 2.0 to be a game-changing reform and not just incremental adjustments,” Emkay said, underlining that only a small share of goods and services will fall under the punitive 40% tax bracket.

Autos in the Fast Lane
The auto sector emerges as the biggest winner, with smaller cars and two-wheelers seeing effective price cuts of nearly 8%. Demand is projected to surge 15–20% in the second half of FY25.

“Maruti, TVS, and Eicher are our top picks,” Jain said, adding that auto lenders like Cholamandalam and Mahindra Finance will also ride the wave as vehicle sales expand.

Cement, FMCG and White Goods to Gain
Cement, long taxed at the highest global rate of 28%, could see GST cut to 18%, making housing and infrastructure more affordable. “A lower tax regime would be incrementally positive for mid-to-long-term consumption trends,” noted Emkay’s Harsh Mittal.

The FMCG space will see selective gains. Packaged foods, dairy, and savoury snacks are expected to get cheaper, boosting companies like Bikaji, Gopal Snacks, and Nestlé. “We see direct benefit largely in foods and beverages,” said analyst Nitin Gupta.

Meanwhile, air conditioners and other white goods shifting to 18% GST are expected to fuel consumption demand across retail.

The Fiscal Catch
While the stock market cheers, the reform comes at a revenue cost. Emkay estimates GST 2.0 could cost the Centre and states over ₹1.2 trillion annually — about 0.4% of GDP.
“States may see a disproportionate hit from GST rationalization, as they depend heavily on SGST for revenue,” warned Madhavi Arora, adding that some states could lose as much as 0.3% of GDP in revenues.

The fear of fiscal slippage has already shaken bond markets, with 10-year G-Sec yields rising to pre-February levels.

Market Outlook: Upgrade Cycle Ahead
Despite fiscal risks, Emkay maintains a bullish outlook, pegging the Nifty at 28,000 by September 2026. The brokerage continues to overweight discretionary consumption, autos, and select FMCG names as the best plays in this cycle.
 

“This is not a damp squib. The ruling NDA has the numbers, and states may be compensated in other ways,” Emkay said, stressing that the probability of GST reforms being diluted is low
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