The bullish forces are on their toes to grab any opportunity but the season has given too much to handle in short term, from tariffs to global tension and GST reforms providing some relief.
The Indian stock market had a volatile but overall modestly positive trading week ending yesterday on September 5, 2025. The equity trading was determined by sector rotations, GST policy changes, and rising turmoil globally that influenced investor sentiment and trading. Benchmark indices traded last week in faded green with Nifty 50 gaining 1.3% and BSE Sensex gaining 1.1%. Despite midday fluctuations and continuous profit-booking, market has managed to avoid any huge crashes.
The market started the week on optimistic cautiousness after the GST Council made historic decisions to rationalise tax slabs, effective from the 22nd September. Abolishing the 12% and 28% slabs, slashing several items to 5% and 18%, and the addition of a new 40% slab for 'sin goods' brought in fresh cheer, especially for consumption-sensitive stocks as well as automobile spaces. Automobile stocks such as Eicher Motors and Mahindra & Mahindra jumped more than 2%, whereas metal and media industries also saw notable gains. On the other hand, IT and FMCG sectors trailed behind, with the likes of ITC and HCL Technologies coming under selling pressure.
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Midcap and smallcap stocks performed better than large caps, representing a rotational trade and investors' risk appetite. The Nifty Midcap index increased nearly 2%, supported by robust quarterly earnings from some sectors and positive policy statements.
In the global context, the Indian market stayed vulnerable to events across various fronts. The US Federal Reserve's suggestion of a potential interest rate reduction in September raised hopes of fresh foreign flows, as relaxing monetary policy tends to soften the dollar and pump in liquidity. However, geopolitical tensions such as the US tariff imposition on Indian products and Russia-Ukraine war held investors in dilemma. US tariffs imposed recently on Indian exports, targeting partly India's imports of Russian oil, have raised fears of trade disruption and possible slowdowns in exports from sectors such as textiles, gems, and chemicals.
Furthermore, international inflationary pressures, supply chain risks, and softer demand in Europe and the US have pressed down on export-oriented sectors, especially IT and pharma. Accordingly, market analysts recommend being cautious on export-dependent stocks while recommending domestic consumption industries depict resilience.
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Market experts have a cautiously optimistic view for the short term. The Nifty is expected to stabilise in the range of 24,400 to 25,000, with the upside resistance around 25,200-25,250 levels. Stability in inflation, trimmed RBI policy, and uptick in rural demand on the back of good monsoon rains are positives.
Samvitti Capital indicates that the stock market is consolidating recent gains and waits for more distinct global signals before a prolonged bulls' spell. They point to mid and small-caps as "growth engines" after September, based on government investment in infrastructure and financial inclusion trends.
The reforms in GST are likely to pick up consumption and corporate margins through a decline in cascades of taxes on day-to-day products. But continuous outflows by foreign institutional investors in the backdrop of global uncertainty could maintain volatility high. Investors should target companies with robust balance sheets, stable revenues, and domestic demand orientation to tide over this mixed situation.
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The week witnessed Indian equities responding dynamically to local reforms as well as international threats, indicating the market's subtle positioning at the risk-opportunity axis. While optimism is rooted in GST developments and good domestic numbers, international trade frictions and macroeconomic doubts need to be kept in mind. Consensus among experts is that while short-term consolidation is probable, a new bull cycle may initiate after September if international conditions abate, highlighting the need for selective stock picking in the emerging context.
