GST 2.0: Will Modi’s Tax Reforms Spark an RBI Rate Cut?

Welcome Back Investor!

China has lifted export restrictions on fertilizers, rare‑earth magnets/minerals, and tunnel‑boring machines, following high‑level talks between External Affairs Minister S. Jaishankar and Foreign Minister Wang Yi - bringing a breath of fresh air to strained India - China ties.
For India, this breakthrough could be as welcome as rain during a drought: it eases critical supply chains rom agriculture (fertilizers) to high‑tech manufacturing (rare‑earth magnets for EVs & electronics) and infrastructure (tunnel‑boring machines) spotlighting the real stakes behind diplomatic choreography.

Let’s dive in!

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IMPACT NEWS

GST Reforms: Could Modi’s Big Move Trigger an RBI Rate Cut?

The Modi government has unveiled what’s being dubbed “GST 2.0”, a sweeping reform aimed at simplifying India’s indirect tax system and easing the burden on households. Under the new framework, multiple GST slabs will be rationalized into two primary rates - 5% and 18% - while essentials, insurance products, and even small cars are set to become cheaper.

This isn’t just festive cheer packaged as a Diwali gift. Economists believe the move could soften consumer inflation by 40 - 80 basis points, creating room for the Reserve Bank of India (RBI) to cut interest rates as early as October. If that happens, borrowing costs for businesses and consumers alike could fall, sparking a fresh cycle of growth.

For Investor, the implications are particularly exciting. EV makers and auto-tech ventures stand to benefit from cheaper small cars, while fintechs and insurance startups could see an uptick in adoption thanks to lower premiums. Lower inflation and potential rate cuts would also make venture funding and credit more accessible, giving young companies greater runway for expansion.

MARKETS

Indian markets ended higher for the fourth straight session on August 19, with Sensex rising 370 points to 81,644 and Nifty 50 climbing 104 points to 24,980, boosted by optimism over upcoming GST reforms and easing Russia-Ukraine tensions. Heavyweights like Reliance (+2.3%) on strong results and expansion plans, and Bharti Airtel drove gains, while autos, media, and oil & gas stocks outperformed alongside midcaps and smallcaps. The rally reflected broad-based bullish sentiment, keeping markets near record highs.
_{Closing figures as on 19.08.25 (3.30pm IST)}

🔎 In Focus

Stock Performance:

Top Gainers

✅ Motherson ₹99.40, ▲5.65%: Spiked after a Nuvama ‘Buy’ note flagged ₹2,100 cr revenue potential from 3 greenfield plants; auto strength + GST buzz helped sentiment.

✅ IIFL Finance ₹471.90, ▲5.10%: No stock‑specific filing today; rally tracked the broad midcap risk‑on backdrop.

✅ One 97 Paytm ₹1,226.20, ▲4.46%: Momentum buying; no fresh disclosure today - tailwind persists from last week’s RBI in‑principle OPA nod.

✅ Exide Industries ₹392.80, ▲4.38%: Volumes jumped ~7.8× vs 2‑week average; rode auto/EV optimism.

Top Losers

🔻 Bharat Dynamics (BDL) ₹1,549.10, ▼3.52%: Defence pack slipped on ceasefire hopes after the Trump - Zelenskyy meet; some valuation cool‑off.

🔻 Kalyan Jewellers ₹507.35, ▼2.47%: Profit‑taking amid heavy volumes as peer BlueStone listed with a muted debut; sector rotation.

🔻 Solar Industries ₹14,699, ▼1.72%: Tracked the defence cohort lower; no new company‑specific triggers in trade.

🔻 CAMS ₹3,835.80, ▼1.57%: Mild dip with no fresh updates; routine rotation in financial services. (Industry also watching SEBI’s Aug‑8 MF distributor charges circular - indirect read‑across.)

INDIA FRONTIER

Everything else you need to know today

✨ Glitter: Gold prices are shimmering near all-time highs - driven by tariff shocks, geopolitical unease, and central bank demand. Analysts see more upside ahead, with bullish forecasts projecting gold could climb to $4,000 by mid‑2026. It's not just a shiny metal - it’s a hedge against uncertainty, especially appealing during volatile times.

🚗 Zoom: A fresh HSBC report suggests slashing GST on small cars from 28% to 18% could drop prices by around 8%. Larger vehicles may see 3 - 5% relief. This isn't budget fodder - it's a potential trigger for a rebound in auto demand across the board.

⚖ Clamp: The regulator is weighing boosted intraday trading limits - while also planning to crack down on expiry-day excesses with tighter monitoring and penalties. It's a double-edged initiative designed to balance flexibility with stability in options markets.

⚡ Power: Hindustan Zinc, already India’s top zinc producer, is gearing up for uranium and rare-earth extraction if private mining gets the nod. Think: powering nuclear growth, strengthening supply chains for EVs and semiconductors - a bold move in resource strategy.

SPECIAL

Trump - Zelenskyy Meeting: What It Could Mean for India’s Tariffs

The recent meeting between U.S. President Donald Trump and Ukraine’s President Volodymyr Zelenskyy wasn’t just about war strategy - it carried ripple effects for global trade, including India’s looming tariff challenge. With Washington considering steep tariffs of up to 50% on Indian exports starting August 27, the timing of this diplomatic engagement is critical.

According to analysts, Trump’s softer tone on trade following the talks may indicate room for negotiation. India, heavily dependent on U.S. markets for sectors like IT services, textiles, auto components, and pharmaceuticals, has much at stake. Any relaxation of tariffs could prevent sharp cost escalations for exporters already navigating a strong dollar and high freight charges.

For startups and mid-sized businesses, the tariffs would have meant tighter margins, slower U.S. expansion, and reduced competitiveness. A potential easing, however, could provide breathing space, sustaining the momentum of India’s export-led growth.

Still, the uncertainty lingers. Was this meeting a genuine step toward recalibrating economic pressure - or simply a geopolitical play tied to Trump’s broader foreign policy? For India, the next few days could decide whether trade continues on smoother ground or enters a turbulent phase.

THE HANOOMAAN INSTITUTE

Investing Like Ackman: High-Conviction Simplicity

Bill Ackman’s portfolio is a masterclass in focused conviction. In Q2 2025, Pershing Square holds only ten stocks, totaling about $13.7 billion. That level of concentration might seem counterintuitive - yet it reveals a powerful lesson for founders.

1. Uber (20% of the portfolio): A dominant presence in ride-hailing and food delivery. Ackman sees it as a global scalable engine with improving profitability.

2. Brookfield Corp (18.5%): A diversified asset manager with exposure to real estate, infrastructure, and green energy - steady cash flow with defensive qualities.

3. Restaurant Brands International (11%): Brands like Burger King and Tim Hortons offer global reach and franchise robustness for long-term brand value.

Other notable bets include Amazon (9%), Howard Hughes (real estate, 9%), Chipotle (8.8%), Alphabet (15%), Hilton (6%), plus speculative positions in Hertz and Seaport Entertainment, both smaller and more volatile but potentially rich in upside.

Ackman’s strategy underscores:

• Selective trust, not dilution.

• Conversations with core strengths, not scattered strengths.

• Endurance over excitement, as few holdings require deep belief, not data minutiae.

For Investor, the message is clear: Focus deeply on what you can command - then deliver. Because mastery speaks louder than presence.

SUPERCHARGE YOUR INVESTING SKILLS

STOCK SCREENER TO UP YOUR GAME

Safal_Niveshak_10Yrs
by - Sholla

Sales growth 10Years > 10 AND
Profit growth 10Years > 12 AND
OPM 10Year > 12 AND
Debt to equity < 0.5 AND
Current ratio > 1.5 AND
Altman Z Score > 3 AND
Average return on equity 10Years > 12 AND
Average return on capital employed 10Years >12 AND
Return on invested capital > 15 AND
Sales last year / Total Capital Employed > 2 AND
Average dividend payout 3years >15

Thanks for reading.

Until tomorrow!

Hanoomaan India Business team

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