September Wrap: Nifty 50, Sensex record modest gains in 11 years amid market volatility

Equity investors found no relief even on the last trading day of September, as domestic equities extended their losing streak to eight sessions in a row, marking the longest such run since March.

The sustained drop caused the Nifty 50 and Sensex to lose over 3.20% of their value during this period, yet they finished the month with a modest gain of over 0.50%, marking their weakest September performance since 2014.

The latest sell-off has also contributed to the Nifty 50’s rare stretch of underperformance versus Asian peers. The benchmark has trailed the MSCI AC Asia Pacific Index for five straight months through September, the longest such run since 2013.

Even so, the Nifty is up 4.10% for the year and on track for its 10th straight annual gain, thanks to relentless buying by domestic institutions. According to exchange data, domestic mutual funds and insurance firms have poured ₹5.72 lakh crore into equities, marking record yearly inflows.

Two halves of September: From optimism to caution

September’s market performance was characterized by two contrasting halves. Early optimism from GST rate cuts, the US Fed’s rate cut, and revived trade talks quickly gave way to caution following Donald Trump’s $100,000 H-1B visa fee hike and the announcement of 100% tariffs on pharma imports.

Combined with broader trade tensions, these developments risk reshaping US-India economic ties and India’s macro-financial stability. The White House’s 50% punitive tariffs on Indian imported goods, along with the hike in new H-1B visa fees, are expected to impact India harder than any other country, prompting foreign investors to pull significant funds from domestic equities.

Analysts warn that this US policy could weigh on revenues in India’s technology sector and may keep FPI sentiment bearish in the coming months.

The FPI sell-off, which had slowed earlier this month, has picked up pace following the visa fee increase, pulling more than ₹22,399 crore from the market over the past six sessions. If overseas investors continue to remain bearish for the rest of the year, it could mark record yearly outflows.

A reversal in overseas investors’ sentiment is likely only upon clarity on the US-India trade deal and signs of earnings recovery to justify current valuations.

Could October bring relief for Indian stock market?

October has traditionally been a strong month for the Indian stock market, with the Nifty and Sensex closing higher in 7 of the last 10 years. Of course, historical trends don’t guarantee a positive month this time; market direction will depend on both domestic and global developments.

The month kicks off with the RBI monetary policy meeting, where the Street largely expects a pause in rate cuts. Following that, the September earnings season begins next week, with tech leaders like TCS, Infosys, and HCL Technologies reporting results. Investors will be watching closely for both numbers and management commentary to gauge the market’s direction.

Trade developments with the US will also be in focus. Any hint of easing the 25% tariff on Indian goods could lift sentiment and influence FPI flows. Additionally, analysts expect the GST rate cuts to support festive-season sales for autos and consumer durables.

Vinod Nair, Head of Research at Geojit Investments, said, “The near-term market outlook remains cautious, with price action likely to stay range-bound. Key developments, particularly regarding tariff policies and the upcoming earnings season, will be crucial in shaping the market’s trajectory beyond the current range."

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.