Indian Stock Markets Witness Significant Decline Amid US Tariff Concerns
Indian benchmark equity indices, Sensex and Nifty, concluded trading on September 26, 2025, with their sixth consecutive day of losses. The 30-share BSE Sensex fell by 733.22 points (0.90%) to settle at 80,426.46, a three-week low, while the 50-share NSE Nifty tumbled 236.15 points (0.95%) to an over three-week low of 24,654.70. This sell-off was largely triggered by an announcement from US President Donald Trump, imposing 100% tariffs on pharmaceutical drugs from next month, along with duties on other goods like kitchen cabinets, bathroom vanities, and heavy-duty trucks.
The pharmaceutical and IT sectors were particularly hit, with most pharma shares dropping and the BSE Healthcare index declining by 2.14%. Foreign Portfolio Investors (FPIs) continued their selling streak, offloading stocks worth ā¹13,450 crore in September, contributing to the market pressure. Concerns over H-1B visa fees also impacted IT stocks. The Indian rupee also depreciated by five paise against the US dollar, closing at 88 rupees and 71 paise.
Robust Economic Growth and Optimistic Outlook Despite External Shocks
Despite global economic turbulence and trade uncertainties, India's economic outlook remains largely optimistic. The Finance Ministry's monthly economic review highlighted robust GDP growth of 7.8% in Q1 FY26, driven by strong domestic demand, which is expected to continue supporting growth in the latter half of the fiscal year. Fitch Ratings raised India's GDP growth forecast for FY26 to 6.9% from 6.5%, and the OECD revised India's 2025 growth forecast upward to 6.7%, citing strong domestic demand and GST reforms.
Prime Minister Narendra Modi stated that the tax burden on citizens would continue to decrease as the economy strengthens, emphasizing that GST reforms are an ongoing process. The Reserve Bank of India (RBI) also affirmed the Indian economy's resilience against US tariffs, noting that 45% of India's merchandise exports to the US are exempt, particularly smartphones and pharmaceuticals. India's macroeconomic stability has been globally recognized, with Japanese agency R&I upgrading India's sovereign rating to BBB+ from BBB, the third such upgrade in FY26.
Transformative GST Reforms Implemented
Significant reforms to the Goods and Services Tax (GST) regime, effective from September 22, 2025, were announced, aiming to provide relief to common citizens and boost businesses. The GST structure has been simplified to two slabs (5% and 18%), with substantial rate reductions on household essentials, life-saving drugs (from 12% to Nil or 5%), two-wheelers, small cars, TVs, ACs, and cement (from 28% to 18%). Additionally, farm machinery and irrigation equipment saw cuts from 12% to 5%, benefiting the agriculture sector. These changes are expected to lower the tax burden on consumers, boost consumption, and improve demand visibility for firms, encouraging investment.
India Aims for Global Leadership in Green Hydrogen and Attracts FDI
India is rapidly positioning itself as a global leader in the green hydrogen sector. S&P Global highlighted India's impressive progress, driven by the National Green Hydrogen Mission, which targets 5 million metric tonnes (MMT) per annum by 2030. Union Minister of New & Renewable Energy, Pralhad Joshi, inaugurated the first Annual Green Hydrogen R&D Conference and launched a ā¹100 crore Call for Proposals to support startups in hydrogen innovation.
Meanwhile, India continues to be an attractive investment destination, with gross Foreign Direct Investment (FDI) reaching a four-year high in June 2025. Gross FDI in Q1 FY26 stood at $25.2 billion, a 10.5% increase year-on-year, with projections suggesting annual gross FDI inflows could reach around $100 billion if the trend continues.
Trade Negotiations and Infrastructure Push
India is actively engaged in trade negotiations with the United States. As part of a potential trade deal, India has offered to purchase corn for ethanol production and increase energy imports, while pressing for the removal of penal tariffs on Russian oil. The US, in turn, is advocating for India to buy American soybeans and corn, though India has expressed concerns regarding genetically modified (GM) varieties.
Domestically, Prime Minister Narendra Modi is set to launch and dedicate development projects worth over ā¹60,000 crore in Odisha on September 27. These projects span telecommunications (including commissioning over 97,500 solar-powered 4G mobile towers using BSNL's indigenous 4G stack), railways, higher education, healthcare, skill development, and rural housing. Union Home Minister Amit Shah also announced that the "Make in India 2.0" initiative would focus on emerging sectors expected to shape the global economy over the next 25 years. The MSME sector in Uttar Pradesh is also receiving significant government support, with an aim to increase trade with Russia to $30 billion by 2025.
Banking and Stock Market Holidays
Indian stock markets (NSE and BSE) were closed on Saturday, September 27, 2025, as it is a standard weekend non-trading day. Similarly, banks across India remained closed on September 27, 2025, being the fourth Saturday of the month, which is a designated bank holiday.