Not so much Putin-Trump summit, it's Modi's GST rationalisation promise that is pushing market up: Sunil Subramaniam

Economic Times

12 hours ago

Sunil Subramaniam, Market Expert, says the Trump-Putin Peace Summit signals a potential easing of US-Russia relations, benefiting countries like India by reducing the risk of additional sanctions. Even if all agreements aren't met, it won't be seen as a failure of the meeting, as Putin has the authority to make decisions unilaterally. However, a bigger thing for India will be the GST rationalisation that the prime minister announced on August 15. Almost 98% of the items are going to see GST cut and it is likely to be signed before Diwali.
ADVERTISEMENT Post the joint press conference with Putin, Donald Trump said that many points were agreed to, but a few remain. What could possibly he be hinting at or referring to when he says that a few remain but many were agreed upon?
Sunil Subramaniam: I think that it is basically territory driven. Russia has occupied certain key Ukrainian territories and two big things are which territories Putin is willing to give away and what he wants to retain. Otherwise, he said 8 out of 10 areas have been mostly conclusive. In fact, he has rated the meeting 10 on 10 from that perspective.
I am saying this because he was very clear that he was not seeking a solution from this meeting. Even before this meeting he said that yes, the next stage would be for a meeting with Mr Zelenskyy and Russia and the US probably together. From what he wanted to get away with, he has gotten away with that. So, to that extent, the meeting must be described as a success because people were expecting a solution to the war from this, I think that was not even what Mr Trump was expecting. So, these two big things are one thing. China's $11 trillion stock market is a headache for both Xi and Trump
But more importantly it indicates an easing of relationship between the US and Russia and that is extremely good news. Let us say that Mr Putin has agreed to certain things and these two are disputable. Now Trump is going to speak to NATO, and get them to agree to Putin's demands. If they do not, Mr Trump can always claim that look I brought a deal to the table, you guys are not accepting, now do what you want. So, this clearly represents that Mr Trump and Putin have agreed on certain things and as an India-based observer and from our country's perspective, Russia and the US getting there is positive for us because additional sanctions could come through if this meeting was a disaster. That is not going to happen.Second, if all things do not go through, it is not a failure of Putin-Trump meeting. It is not Mr Trump's failure. Remember, he is dealing with a leader who has no democracy to go and represent his case to. Mr Putin is the ultimate decision maker. Even if he decides to give up some Russian wins there, nobody is going to object to him. So, he is talking to a person who can conclude a deed, whereas that is not necessarily true in other countries with our democracy. So, to that extent, it is positive from an India perspective that the danger of secondary sanctions is removed there and if things worsen, he may now need to act on China and not put more pressure on India because he has taken the India pressure to the maximum extent already.
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With respect to the Indian market, FIIs have been on a selling spree leading to a bit of volatility. Is that going to continue? How do you see the Indian market moving forward in the near term? Are we going to be largely insulated due to domestic investor interest?
Sunil Subramaniam: Markets will be relatively calm about this news. They do not need to jump up. We have a big thing in India in terms of GST rationalisation that the prime minister announced on August 15 in his independence day speech. The details are to come out and almost 98% of the items are going to see a reduction in GST and it is likely to be signed before Diwali. The markets should react positively on the consumption stocks and the banking related stocks on Monday. So, the markets will be up. How much of it can be attributed to this easing of Trump-Putin relation and how much to the local factors we have to see.
Unlock 500+ Stock Recos on App I expect the markets to be positive and FII also because they will see this growth in the Indian consumption sector may come in and start buying into FMCG and consumer discretionary stocks. So, the Indian market will respond positively. Not all can be attributed to the Trump-Putin meeting but definitely there are enough wins here.
ADVERTISEMENT The second point is Pakistan is taking an edge over India in terms of ties with the US and that is what the main problem is. But two things I would like to say here, one is that India is not for sale. We are not willing to give up our Bitcoin just to make up with the president. We are not going to propose his name for a Nobel Prize just because of a deal. We are a nation which is strong on our own. So, there is pride at stake here. We are not going to put all those just to have a good relationship with Mr Trump. Number two is that Mr Trump has not helped that cause by using very damaging language. He called them obnoxious tariff related things. He also called India a dead economy. He is not the most popular person in India right now and India has also taken an iron hand in a velvet glove stance on this. We are not fighting tooth for tooth or throwing insult after insult, but we are staying firm on saying that buying oil from Russia will be based on our economic needs and what our citizens need. So there is going to be a different way that this relationship pans out. So, to that extent, secondary sanctions may ease away. Regarding the 50% tariff on India, I treat the 25% as an economic tariff, the second 25 as a political tariff.
ADVERTISEMENT The chances of political tariff may ease up in the coming weeks based on how this goes because I do not think Mr Trump is going to be angry with Putin for anything because Putin has said I am looking to end the war. So, to that extent, whatever he wanted to punish India for as a route to make Putin agree to a meeting and do something that has been achieved. He could ease up on the 25% that if announced in the next couple of weeks, will be a huge positive for Indian markets. That is my take on this situation here. The geopolitics does not affect the Indian market so much. The Indian markets react to the Indian impact due to these talks.
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