Indian Equity Markets End Higher Amid Renewed Optimism on India-US Trade Talks

Strategic Insights -

The Indian equity markets concluded the passing week on a higher note, with gains of around one and a half percent each, driven by renewed optimism over the resumption of India-US trade talks. The US Fed's rate cut hopes also bolstered investor sentiments. Weaker-than-expected US consumer price inflation and producer price inflation further reinforced expectations of a Fed rate cut at the next week's meeting. Major developments during the week included Fitch Ratings raising India's GDP growth forecast for FY26 to 6.9%, citing strong June quarter growth and domestic consumption-led demand.

Key Takeaways:

  • Fitch Ratings raised India's GDP growth forecast for FY26 to 6.9%, citing strong June quarter growth and domestic consumption-led demand.
  • Total vehicle retail sales in India grew by 2.84% in August, with customers postponing purchases ahead of GST reforms.
  • India Ratings and Research (Ind-Ra) projected that GST rationalisation will lower cement prices by Rs 30-35 per 50 kg bag.
  • India's outward foreign direct investment (OFDI) commitments declined by 38.44% in August, to $2097.74 million, from $3,407.45 million in August 2024.
  • The proposed trade pact with the EU is expected to provide huge opportunities for the auto industry, boosting exports and forging new partnerships.
  • The GST reform will lower tax rates on 375 items, stimulate consumption, and support economic growth.
  • The reforms will reduce government revenues and boost private consumption, providing a fiscal policy support for households.
  • India's effective GST rates are likely to boost private consumption and support economic growth.

Statistics:

  • Fitch Ratings raised India's GDP growth forecast for FY26 to 6.9%.
  • Total vehicle retail sales in India grew by 2.84% to 19,64,547 units in August, compared to 19,10,312 units in August 2024.
  • India's outward foreign direct investment (OFDI) commitments declined by 38.44% in August, to $2097.74 million, from $3,407.45 million in August 2024.
  • The Bombay Stock Exchange (BSE) Sensex surged by 1193.94 points or 1.48% to 81,904.70 during the week ended September 12, 2025.
  • The BSE Midcap index gained 724.53 points or 1.59% to 46,184.30, while the Smallcap index surged by 796.18 points or 1.51% to 53,548.49.

Sources:

  • Fitch Ratings - Global Economic Outlook (GEO)-September
  • Federation of Automobile Dealers Associations - August 2025 vehicle retail sales data
  • India Ratings and Research (Ind-Ra) - latest report on GST rationalisation
  • RBI data report - India's outward foreign direct investment (OFDI) commitments in August 2025
  • Department of Commerce - Rajesh Agrawal's statement on the proposed trade pact with the EU
  • Moody's Ratings - latest report on the GST reform
  • Accord Fintech Pvt. Ltd. - market data and analysis.