Indexed rear derailer shifts two cogs for each step
I would check the SRAM grip shift that you purchased.  SRAM makes grift shifters for both their own derailleurs and Shimano's.  The actuation ratio on those shifters is different.  SRAM uses a 1:1 ratio for their high end stuff.  Most of Shimano's is closer to 2:1.  The SunRace website you linked to lists the M40 as 2:1, meaning you'll need a SRAM grip shifter with 2:1 actuation.