India's domestic consumption, GST reforms cushion US tariff impact: Report

New Delhi, Sep 17 (IANS) The potential impact of US tariffs has been cushioned by India's strong domestic fundamentals, robust domestic consumption and GST 2.0 reforms, a report said on Wednesday.

GST reforms and front-loading of rate cuts by RBI will be supportive of India's equity market growth and would help cushion it from external shocks, the report from Bank of Baroda said.

Sensex grew by $66.5 billion in market capitalisation during 2025, despite the US tariff on Indian imports. Markets have accounted for tariff uncertainty and are now focussing on underlying economic fundamentals, the analysts said.

The report noted that India was among the four countries, alongside Hong Kong, Brazil and China, that gave positive returns from January to April period after US President Trump started announcing tariffs.

From January to April, US indices Dow Jones and S&P 500 recorded losses, wiping out $6.1 trillion in market value.

Global stock markets rebounded sharply in mid-2025, it noted. A 90-day tariff pause announced in April, along with US trade agreements with the UK, Japan, Indonesia, and Vietnam, and a truce with China, led to a rebound in the market from April to September.

Apart from the US, most of the member countries of trade agreements along with Hong Kong, China and Thailand posted double-digit growth.

The Dow's market capitalisation increased by $2 trillion year-to-date, while the S&P 500 gained $4.9 trillion. China’s Shanghai Composite rose by $1.6 trillion, while Japan’s Nikkei gained $756.4 billion.

Global head of equity strategy at Jefferies, Christopher Wood on Tuesday said that domestic mutual fund inflows have shielded Indian equities from a decline of 20-30 per cent this year, amidst persistent selling by foreign portfolio investors (FPI).

August marked the 25th consecutive month of net inflows from domestic investors, with $37.6 billion invested in equities in the first five months of FY26.

--IANS

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