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September 13, 2025 Indian Economy and Business: Forex Reserves Surge, Real Estate Poised for Trillion-Dollar Growth, and GST Reforms Boost Sentiment

India's economic landscape on September 12, 2025, saw significant developments including a substantial increase in foreign exchange reserves, a robust outlook for the real estate sector, and the positive impact of recent GST reforms. While retail inflation saw a slight uptick, underlying food inflation remained negative, contributing to overall easing inflationary pressures. The stock market closed higher, reflecting investor optimism amidst global cues and domestic policy changes.

Foreign Exchange Reserves See Significant Jump

India's foreign exchange reserves surged by $4.038 billion to reach $698.268 billion during the week ending September 5. This notable increase was primarily driven by a substantial rise in the value of gold reserves. In the preceding week, the overall reserves had also grown by $3.51 billion to $694.23 billion. Foreign currency assets, a major component of the reserves, increased by $540 million to $584.477 billion. Gold reserves alone expanded by $3.53 billion to $90.299 billion during this period.

Real Estate Sector Projected for Massive Growth

The Indian real estate sector is on track for substantial expansion, with projections indicating it could reach a market size of USD 5-10 trillion by 2047. This growth is expected to contribute significantly to India's GDP, potentially accounting for 14-20 percent by 2047, up from the current 6-8 percent. A report by Colliers in collaboration with the Confederation of Real Estate Developers’ Association of India (CREDAI) highlights rapid urbanization, large-scale infrastructure development, affordable housing demand, and digital transformation as key drivers for this growth. The report forecasts that both Grade A office and industrial stock could surpass the 2 billion sq ft mark by 2047, with residential sales potentially doubling to 1 million units annually.

Inflation Trends and Economic Outlook

Retail inflation, based on the All India Consumer Price Index (CPI), inched up to 2.07% year-on-year in August 2025, a 46 basis points increase compared to July 2025. Despite this, food inflation remained negative at -0.69%, primarily due to significant declines in the prices of vegetables (-15.9%) and pulses (-14.5%). Oils, however, continued to exert upward pressure with 21.2% inflation. The Dun & Bradstreet Economy Observer report for August 2025 noted broad-based domestic momentum and easing inflation. It also highlighted India's economy growing by 7.8% year-on-year in Q1 FY26, with the Index of Industrial Production (IIP) expanding by 3.5% in July 2025, driven by manufacturing gains. The Reserve Bank of India (RBI) maintained its repo rate at 5.50% and adopted a neutral policy stance, signaling a wait-and-watch approach as inflation stabilizes.

Impact of GST Reforms and Trade Dynamics

Recent Goods and Services Tax (GST) reforms have been lauded for simplifying tax slabs from four to two, introducing zero tax on essential goods, and reducing taxes by up to 10 percent on numerous items. These changes are expected to benefit citizens and industries, making approximately 90% of goods cheaper, including essential items, electronics, and automobiles. Farmers are also set to gain from reduced GST rates on agricultural machinery. However, trade concerns persist, particularly with the United States imposing a 50% tariff on Indian exports from August 27, prompting India to explore new trade partners.

Stock Market Performance and Sectoral Insights

Indian equity markets extended their winning streak for the eighth consecutive session, with the BSE Sensex closing at 81,904.70, up 355.97 points, and the NSE Nifty 50 ending at 25,114.00, higher by 108.50 points. This positive sentiment was partly fueled by softer US labor market data and expectations of potential interest rate cuts by the Federal Reserve, along with signs of progress in US-India trade ties. Market experts suggest that growth is largely domestic-driven, with consumer goods, particularly FMCG, footwear, and domestic apparel makers, expected to make a strong comeback. Healthcare and hotels also remain attractive sectors. Auto ancillaries present selective opportunities, and energy stocks, especially those in renewables, are promising. However, IT stocks are advised to be approached with an equal weight, with selective focus on companies strong in AI and automation.

Company Specific Developments

  • Hindustan Copper: Shares jumped over 10% following plans to nearly triple its capacity to 12.2 MT by FY31 from 3.47 MT in FY25, with a capital expenditure of around Rs 2,000 crore.

  • HFCL: Shares surged over 4% after the Andhra Pradesh government allocated 1,000 acres for defense manufacturing facilities, where HFCL is expected to play a role.

  • JSW Energy: Shares rose up to 3% after commissioning 317 MW of renewable energy capacity, increasing the share of renewables in its total capacity to 57%.

Several companies, including Urban Company, Shringar House, and Dev Accelerator, saw overwhelming investor demand for their IPOs. Meanwhile, Tata Consultancy Services (TCS) and C-DAC signed an MoU to accelerate the development of India's sovereign cloud ecosystem.

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