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HomeMarket NewsGST reforms a ‘hope trade’ to revive consumption, says Gautam Trivedi
Gautam Trivedi, Managing Partner at Nepean Capital, highlights India’s sharp underperformance against Asian markets and explains why FPIs remain cautious despite high valuations.
The recent Goods and Services Tax (GST) reforms are a crucial "hope trade" that could significantly revive consumption and broader economic growth, according to Gautam Trivedi, Managing Partner at Nepean Capital.
He believes that while investors are waiting for earnings momentum to return, GST reforms could play a decisive role in reviving domestic consumption.
The Indian equity market has underperformed global peers this year, weighed down by foreign portfolio investor (FPI) outflows and an earnings slowdown.
India’s performance stands in stark contrast to other Asian markets. While Korea, Taiwan and China have posted gains between 25% and 54% in dollar terms, India has managed only about 1% year-to-date.
FPIs have pulled out nearly $16 billion so far in 2025, with total outflows of $28 billion over the last twelve months, the steepest across emerging markets.
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Trivedi noted that overseas investors remain cautious given the strong earnings backdrop in developed markets. “FPIs need to see earnings growth come back, and if that doesn’t come back, I suspect they will continue to sell,” he said, pointing out that valuations alone are not enough to draw global money when earnings delivery is missing.
He underlined that GST 2.0 has emerged as the key lever for optimism. “The big hope right here is that GST 2.0 will actually help significantly improve earnings for the second half of the year,” Trivedi observed. He argued that lower tax rates on consumer-facing goods could trigger savings that would be ploughed back into the economy, spurring a wider consumption cycle.
Sectors such as white goods, automobiles, and consumer staples are expected to benefit most from the reforms, especially with the festive season ahead.
However, Trivedi cautioned that it is still early to gauge the full impact, noting that dealers and consumers are waiting for the revised GST rates to take effect.
(Edited by : Unnikrishnan)
