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Foreign institutional investors (FIIs) have sold over ₹1 lakh crore worth of Indian equities since July, weighing on market sentiment. However, steady domestic institutional investor (DII) inflows have provided support, provisional stock exchange data showed.

The outflows, driven by weak earnings, high valuations, and U.S. tariff uncertainty, kept indices range-bound. Between July 1 and September 8, FIIs sold ₹1.02 lakh crore, including ₹7,800 crore in just the first six trading sessions of September. NSDL data showed September sales at ₹11,169 crore up to the 13th.

For 2025 so far, FIIs have net sold ₹2.18 lakh crore, while DIIs absorbed the pressure with net buying of ₹5.37 lakh crore, continuing their streak since August 2023. Analysts noted FIIs rotated money to cheaper markets like China, Hong Kong, and South Korea, which outperformed India this year. Still, India’s strong Q1 GDP growth, tax reforms, GST rationalisation, and potential rate cuts could spark a reversal. Earnings growth may stay modest at 8–10% in FY26 but could accelerate to 15%+ in FY27, likely reviving FPI sentiment.

India’s combined exports of goods and services rose 9.34% in August 2025 to $69.16 billion, according to data from the Commerce Ministry. Merchandise exports touched $35.10 billion, up from $32.89 billion a year earlier, despite global uncertainties from U.S. tariff hikes.

Commerce Secretary Sunil Barthwal said the performance shows government policies are paying off. Export growth was led by electronic goods (+25.9%), gems and jewellery (+15.6%), petroleum products (+6.5%), engineering goods (+4.9%), and pharmaceuticals (+6.9%).

Services exports were estimated at $34.06 billion, up from $30.36 billion last year. Cumulative exports for April–August reached $349.35 billion, up 6.18% year-on-year. Imports for August fell 7% to $79.04 billion, with merchandise imports at $61.59 billion versus $68.53 billion last year. Key export destinations showing strong growth included the UAE, U.S., Netherlands, Hong Kong, and China.

SBI Research has ruled out the possibility of an October rate cut after India’s August CPI inflation rose slightly above the 2% mark, touching 2.07%. A December cut also looks doubtful unless growth data improves in Q1 and Q2.

The report highlighted that recent GST rate cuts on nearly 295 essential goods—from 12% to 5% or nil—could lower inflation by 25–30 basis points in FY26, while rationalisation of service rates may further ease it by 40–45 basis points. Overall, CPI inflation could moderate by 65–75 bps through FY26–27.

Inflation trends showed food and beverages prices turning positive after two months of decline. Meat and fish rose 1.48%, oils and fats surged 21.24%, while vegetables stayed in negative territory at –15.92%. Core inflation climbed to 4.16%, and both rural and urban inflation inched up in August to 1.69% and 2.47%, respectively. Among states, 26 out of 35 recorded inflation below 4%, while Kerala and Lakshadweep exceeded 6%. Meanwhile, kharif sowing covered 2.5% more area than last year, but heavy rains pose risks to crop yields.

Dear Trader…

The Nifty Future ends 40 points lower, while the Sensex was down by 119 points. Among sectors, the Reality index outperformed, rallying over 2.60 percent, whereas intraday profit booking was seen in selective IT and Pharma stocks. Sector-wise, strength was observed in Construction, Energy, and Financial Services, while IT, Pharma, and Healthcare witnessed notable weakness.

Participants sentiment remained cautious ahead of the US Federal Reserve’s policy announcement later this week and the anticipated trade discussions between US President Donald Trump and Indian Prime Minister Narendra Modi. On the domestic macro front, India’s wholesale prices rose 0.52% year-on-year in August 2025, exceeding market expectations of a 0.30% increase and rebounding from a 0.58% decline in July.

Nifty futures opened at 25200 points against the previous close of 25205 and opened at a low of 25147 points. Nifty Future closed with an average movement of 56 points and a decline of around 40 points and 25164 points…!!

On the NSE, the midcap 100 index will rise 0.44% and smallcap 100 index is closing rise 0.76%. Speaking of various sectoral indices, the NSE saw gains in only Realty, PSU Bank, Oil and Gas and Metal Pharma stocks, while all other sectoral indices closed lower.

At the start of intra-day trading, October gold opened at Rs.1,09,255, fell from a high of Rs.1,09,359 points to a low of Rs.1,09,800 with a decline of 170 points, a trend of around Rs.1,09,200 and September Silver opened at Rs.1,27,121, fell from a high of Rs.1,29,123 points to a low of Rs.1,27,121 with a decline of 461 points, a trend of around Rs.1,28,377.

Meanwhile, The FIIs as per Monday’s data were net buyers in both equity and debt segments, according to data released by the NSDL. In equity segment, the gross buying was of Rs 12859.12 crore against gross selling of Rs 11836.48 crore. Thus, FIIs stood as net buyers of Rs 1022.64 crore in equities.

In the debt segment, the gross purchase was of Rs 3851.23 crore with gross sales of Rs 3044.92 crore. Thus, FIIs stood as net buyers of Rs 806.31 crore in debt. Of the total debt, FIIs stood as net buyers in Debt-General Limit segment at Rs 1756.06 crore, they stood at net sellers in Debt-VRR segment at Rs 1595.67 crore, while net buyers in Debt-FAR segment at Rs 645.92 crore.

In the hybrid segment, the gross buying was of Rs 25.83 crore against gross selling of Rs 34.18 crore. Thus, FIIs stood as net sellers of Rs 8.35 crore in hybrid segment.

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Despite a steady flow of new listings, trading activity on India’s SME (small and medium enterprises) platforms has not met expectations. Indicators such as deal volumes, number of traded companies, share turnover, and total transaction value highlight a slowdown.

While the number of listed companies has increased, average trades, turnover, and traded share volumes have all declined. On the BSE SME platform, the number of trades rose just 6.4% year-on-year in August, compared to 13.2% growth a year earlier. Meanwhile, the average traded value fell 10.4%, and the number of traded shares dropped more than 25%. NSE’s July data reflects a similar trend.

Since August 2024, as many as 201 companies have been listed on SME exchanges. Yet, available data shows average daily volumes fell 46.9% year-on-year till July-end, compared to a 32.2% decline on the main board. More official data is still awaited.

Since its inception in 2012, the BSE SME platform has helped 608 companies raise ₹10,912.15 crore, with 196 subsequently migrating to the main board. On NSE, 647 SMEs had raised ₹18,697 crore as of July 2025, with 147 moving to the main platform. The combined market capitalization of NSE-listed SMEs stood at ₹2.2 lakh crore at July-end.

Investor appetite for international mutual funds is making a strong comeback, driven by their recent outperformance compared to domestic schemes. In August alone, net inflows touched nearly ₹500 crore — the highest since October 2021. At the same time, about 25,500 new accounts were added, marking the sharpest monthly increase in 19 months.

Although most international schemes remain closed to fresh subscriptions due to regulatory uncertainty, investor demand remains strong. Many Indian fund houses’ schemes invest primarily in U.S. and Chinese equities, both of which have surged significantly over the past year. The rupee’s depreciation has further boosted returns, making these funds more attractive than local options.

Compared to domestic equity funds, international funds offer geographical diversification benefits. Despite challenges such as high tariffs and currency weakness in India, global investments have delivered strong returns. However, experts caution that valuations in many global markets are elevated relative to long-term averages, making these funds more suitable for long-term investors.

Indian investors today have three main avenues for overseas exposure: mutual funds, GIFT City-based international funds, and digital platforms offering direct equity access to markets like the U.S.

Investment through GIFT City-managed funds is also rising rapidly. By June 2025, total foreign investments via this route stood at $1.43 billion, nearly 70% higher than $842 million at the end of March. Similarly, PMS assets grew 23% quarter-on-quarter to $1.46 billion in April–June, compared to $1.18 billion in March 2025. These vehicles are especially popular among high-net-worth individuals (HNIs) and family offices.

U.S. consumer inflation accelerated to 2.9% in August, its highest level since January, compared to 2.7% in July. Rising food and energy prices drove the increase. At the same time, unemployment rose as jobless claims jumped by 27,000 to 263,000 — the highest since October 2021.

The dual challenge of higher inflation and rising unemployment has complicated the Federal Reserve’s decision-making. While inflation remains above the Fed’s 2% target, growing joblessness raises recession risks, typically warranting a rate cut. Markets, however, believe political pressure from President Donald Trump could push the Fed toward a rate cut in its September meeting.

The Dow Jones Industrial Average surged over 500 points on Thursday, while futures rallied by more than 600 points on hopes of monetary easing.

The European Central Bank kept its key interest rate unchanged at 2% in its latest meeting, despite stable inflation near its target. Policymakers cited ongoing uncertainties, including political turmoil in France and continued geopolitical tensions with Russia.

Growth forecasts for the eurozone were adjusted, with 2024 estimates raised to 1.2% but 2025 projections trimmed to 1%. Inflation forecasts for 2025 and 2026 were revised slightly higher.

Retail inflation rose to 2.07% in August, ending a nine-month streak of easing price growth. The rate stood at 1.61% in July and 3.65% a year earlier. Rising prices of vegetables, meat, fish, and edible oils contributed to the uptick.

Food inflation remained negative at -0.69% in August but was narrower than July’s -1.76%. Edible oils recorded the steepest price rise, with inflation hitting 21.2% — the highest in four years. Mustard oil prices rose 24.2%, refined oil 23.5%, and coconut oil an extraordinary 133.1%.

Rural inflation climbed to 1.69% from 1.18% in July, while urban inflation increased to 2.47% from 2.1%. Kerala recorded the highest inflation at 9.04%, while Assam reported deflation at -0.66%.

ICRA’s Chief Economist Aditi Nayar said food and beverages were the key drivers of inflation, with core inflation also ticking up to 4.3%. She expects average retail inflation this fiscal year to hover around 2.6%, likely bottoming out in October-November. The MPC is expected to hold rates steady in its October policy review.

India’s foreign exchange reserves rose by $4.038 billion in the week ended September 5, reaching $698.268 billion, RBI data showed. This follows a $3.51 billion rise in the previous week.

Foreign currency assets (FCA) increased by $540 million to $584.477 billion, while gold reserves surged by $3.53 billion to $90.299 billion. India’s IMF reserve position rose modestly by $20 million to $4.751 billion, though Special Drawing Rights (SDRs) fell by $34 million to $18.782 billion.

Indian exporters have urged the Reserve Bank of India (RBI) to provide a one-year moratorium on loan repayments and offer a more favorable exchange rate mechanism to cushion the impact of U.S. tariff hikes. The U.S. recently imposed tariffs of up to 50% on Indian goods, threatening sectors such as gems & jewelry, textiles, fisheries, and chemicals.

In a meeting with RBI officials, the Federation of Indian Export Organisations (FIEO) requested collateral-free credit guarantee schemes, similar to those extended to small businesses during the COVID-19 period. Exporters also proposed being allowed to sell dollars at the Real Effective Exchange Rate (REER) instead of spot rates, which would fetch them nearly 15% more rupees compared to current market levels.

Banks have indicated readiness to support exporters with financing, though they remain cautious about offering blanket repayment holidays. Meanwhile, trade negotiations between India and the U.S. are expected to resume shortly.