September wrap up

September proved to be a month of recalibration for Indian markets. Equity benchmarks experienced selective weakness, safe-haven flows into gold ETFs surged, and macroeconomic indicators sent mixed signals — low headline inflation but rising input costs and a widening trade deficit. Here’s a comprehensive look at what drove markets in September and what it means for investors.

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Market Overview

Equities began the month on a cautious note, influenced by global central bank signals, volatile foreign institutional flows, and concerns over policy direction. While the first half of September saw steady trading, the second half turned bearish, driven largely by financials and cyclical sectors. By the end of the month, Indian benchmarks recorded their longest losing stretch in 2025, reflecting broader risk-off sentiment.

Investors shifted toward safety, with gold and precious-metal ETFs seeing historically high inflows. This was driven by geopolitical uncertainty, festival demand, and caution around equities.

The month also saw structural changes in market indices. The semi-annual Nifty 50 reshuffle, effective September 30, added InterGlobe Aviation (IndiGo) and Max Healthcare, replacing Hero MotoCorp and IndusInd Bank. This reshuffle led to significant repositioning by funds tracking the index.

Market Breadth and Internals

September’s market internals highlight the cautious mood:

Advances vs Declines: Market breadth weakened in the second half of the month, with declines outnumbering advances as selling intensified in private banks and cyclical sectors. 52-week Highs/Lows: Fewer new highs were recorded compared to the first half of 2025, while several midcaps and sectoral names hit multi-month lows. Volume Trends: Elevated volumes were seen in risk-off sessions, reflecting portfolio repositioning, while gold ETFs recorded significant inflows.

Sector Highlights

Winners: Gold and precious-metal ETFs saw record inflows, reflecting investor preference for safe-haven assets. Energy and commodity-linked names received intermittent interest due to rising global commodity prices. Losers: Private banks and financials dragged indices lower, while consumer cyclical and discretionary names underperformed amid rupee depreciation and margin concerns. Structural Moves: The Nifty reshuffle created short-term volatility in IndiGo and Max Healthcare, attracting passive-fund flows and trading interest.

Macro and Economic Drivers

Retail Inflation (CPI): September saw headline inflation drop to a multi-year low, opening potential policy space for the RBI and influencing market expectations. Wholesale Prices (WPI): WPI remained muted at around 0.1% YoY, with food deflation offsetting input-cost pressures in industry. Trade and Imports: Import bills rose, particularly for vegetable oils, while the merchandise trade deficit widened to $32.15 billion, highlighting external vulnerabilities.

Key Market-Moving Events

Early September: Investors focused on global central bank signals and FII flows. Domestic data in the first week kept markets in a neutral-to-cautious range. Mid-September: Gold ETF inflows surged as investors sought safe havens, while earnings reports produced mixed results, increasing market dispersion. Late September: A multi-session decline led by private banks coincided with the Nifty semi-annual reshuffle, creating volatility ahead of the index changes on September 30.

Top Volume Movers (NSE Highlights)

InterGlobe Aviation (IndiGo): High volumes driven by index inclusion and airline-sector interest. Max Healthcare: Index reshuffle triggered higher trading activity and passive-fund inflows. Private Banks: Elevated volumes as investors repositioned in response to sector weakness.

Disclaimer: For educational purposes only. Not a buy/sell recommendation.

Global Economic Calendar Highlights

US Fed statements and minutes influencing global policy expectations. Eurozone PMI and inflation prints affecting growth sentiment. China trade and manufacturing data impacting commodity demand. Geopolitical developments and energy/commodity price movements shaping safe-haven flows.

What This Means for Investors

Focus on quality: Weakness in financials and cyclical sectors suggests favoring large caps and companies with strong balance sheets. Consider gold exposure: Safe-haven flows highlight the importance of tactical allocation to gold or gold ETFs. Watch currency and trade risks: Rupee depreciation and a widening trade deficit may pressure margins for commodity-dependent sectors. Leverage index reshuffle opportunities: Monitor new Nifty 50 inclusions like IndiGo and Max Healthcare for tactical rebalancing or long-term allocation.

Closing Thoughts

September 2025 was a month of re-pricing: headline inflation fell sharply, external pressures rose, and markets responded with selective risk-off behavior. Investors preferred safety over speculative positioning, while structural index flows created short-term volatility. As markets enter October, careful sector selection, tactical hedges, and awareness of global cues will be key for navigating this environment.

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