Indian markets could soon close the gap with other emerging markets. A mix of diplomacy and domestic reforms is boosting confidence.
According to the Times of India, the recent meeting between Prime Minister Narendra Modi and China’s President Xi Jinping helped ease geopolitical tensions. Both sides discussed trade and cooperation, reducing investor fears of conflict spilling into markets.
At the same time, the Indian government announced fresh GST rate cuts. Lower taxes on key goods are expected to lift consumer demand and support corporate earnings. Analysts say this move could push the Nifty and Sensex higher in the coming quarters.
So far in 2025, Indian stocks have lagged behind peers in Brazil and South Korea. Global funds have been cautious, citing high valuations and political risk. But easing tensions and tax cuts may now bring a new wave of foreign investment.
Foreign portfolio inflows have already picked up in September. The rupee has also strengthened slightly against the U.S. dollar, signaling renewed confidence.
Why This Matters
- Diplomatic thaw: The Modi-Xi meeting eases border and trade worries.
- GST cuts: Lower consumer taxes should help demand and company profits.
- Valuation gap: Indian equities may narrow the gap with other EMs.
- Investor flows: Stronger foreign inflows could support long-term growth.
Bottom line: After months of underperformance, Indian markets are showing signs of life. If reforms continue and geopolitical ties improve, India could soon catch up with other emerging markets.
