Prime Minister Narendra Modi’s announcement on the Union Government reviewing the GST regime led to a 1% increase in the Nifty 50 in the following session.
Narrative-led stock rallies have a “pathetic” track record and the rally after the announcement of GST rationalisation is an instance in the context, according to a research report by Kotak Institutional Equities.
Prime Minister Narendra Modi’s announcement on the Union Government reviewing the GST regime led to a 1% increase in the Nifty 50 in the following session. Analysts cited the expectation of consumer-facing sectors such as automobiles, consumer discretionary and durables coming under lower slab behind the optimism in the market.
Researchers at Kotak Institutional Equities, however, feel that this is one of the many narratives that have gone wrong. GST rationalisation’s impact on the corporate India’s earnings depends upon various political and macroeconomic issues, the report read. Centre-state fiscal relations, the impact on individual brands and the strategies of the companies.
“We note that the market has been in the thrall of narratives for a while, with a new narrative catching the fancy of the market every few weeks, only for it to disappear quietly later, market participants may benefit more from focusing on potential disruption risks in most sectors and companies rather than believing (or even worse, generating) dubious narratives” said researchers at Kotak Institutional Equities.
The report also lists data on the narratives. Demand recovery in IT, defence indigenisation, increased privatisation , 100-day plan post 2024 elections, recovery of corporate earnings among others are among the many narratives that were discussed in 2024, that moved markets in the short run but did not play out , analysts at KIE noted.
Published – August 26, 2025 08:08 pm IST