Market Outlook
| September 30, 2025 | 1 Month |
1 Year |
|
| Rupees per Dollar | 88.79 | 88.21 | 83.80 |
| Oil (dollars per barrel) | 67.02 | 68.12 | 71.77 |
| Retail inflation (CPI) | 2.07% (August) | 1.61% | 3.65% |
- The US Federal Reserve (Fed) cut the policy rate by 25 bps to 4.00–4.25% in its Sept’25 policy meeting. The policy statement indicated further rate cuts in its upcoming policies citing downside risk to the labor market.
- RBI in its policy kept the Repo rate unchanged at 5.50%. RBI MPC decided to continue with the neutral stance while also deliberating on future policy easing for supporting growth. CPI inflation projections for FY 26 reduced to 2.6% from 3.1% earlier largely due to sharp decline in food prices. Benign inflation and uncertain growth outlook (in the absence of a trade deal with the US) has opened up space for RBI to cut rates. We expect RBI to cut policy rate by 25 bps in December policy
- We continue to remain ‘neutral’ on the outlook for bond markets. We expect the 10-year yield to trade in a range of 6.45%-6.65% and the long term yields to remain under pressure
| Index | 1 month (%) | 1 year (%) | 3 years (%) |
|---|---|---|---|
| NIFTY50 | 0.8 | -4.6 | 12.9 |
| BSE100 | 1.0 | -5.6 | 13.7 |
| NIFTY500 | 1.2 | -6.2 | 15.3 |
| NIFTY Midcap100 | 1.4 | -6.0 | 22.6 |
At September 30, 2025
Nifty was up 0.8 % for the month of September 2025
- Markets remained volatile due to a) GST rate cut, b) US Fed rate cut and c) Tariffs impact
- Within BSE 100 index, amongst sectors Metals & Minerals/Finance outperformed while Technology/Retail underperformed the broader market
Our outlook remains neutral in the short term while it remains positive in the medium term
- Tariffs related uncertainty to continue to keep markets volatile in short term
- Earnings are expected to get some boost due to GST cut
- Volatile foreign flows being alleviated by steady domestic flows
- The Nifty’s one year forward P/E at 21x, is above its 5-year average
In the medium term, we expect certain important drivers for growth:
- Policy continues to remain growth oriented, as demonstrated by rate cuts (CRR,Repo), tax cuts/ rationalisation (Income tax, GST), liquidity boost etc
- To mitigate tariffs impact, India has started inking bilateral trade agreements (BTAs)
- Structural growth levers are in place for India through investment focus, supply chain relocation, demographics, policy reforms and digitization.
- Lower corporate leverage, healthy banking balance sheet and improving return ratios bode well for medium term growth construct
Market consensus for Nifty earnings CAGR over FY2025-FY2027 at 9%
COMP/DOC/Oct/2025/610/1270
