Economic Resilience and Growth Amidst Global Challenges
India's economy continues to exhibit robust resilience, with Finance Minister Nirmala Sitharaman affirming that the country's growth is firmly rooted in domestic fundamentals. Speaking at the Kautilya Economic Conclave 2025, Sitharaman emphasized India's capacity to absorb external shocks despite a shifting global landscape marked by geopolitical conflicts, sanctions, and tariffs. The Indian economy expanded by 7.8% year-on-year in the April-June quarter, marking its fastest growth in five quarters. The projected growth for the fiscal year remains at a healthy 6.8%, even amidst increasing concerns over US tariffs.
Reserve Bank of India (RBI) Governor Sanjay Malhotra echoed these sentiments, highlighting India's strong macro-economic fundamentals, including low inflation, healthy foreign exchange reserves, a narrow current account deficit, and robust bank and corporate balance sheets, positioning India as an "anchor of stability in a volatile world."
Monetary Policy and Trade Dynamics
The RBI has opted to keep its policy rate unchanged at 5.5%. However, the central bank signaled potential room for rate reductions in December, contingent on assessing the impact of recent consumption tax cuts and tariffs on the economy.
On the trade front, the United States doubled tariffs on Indian goods to as much as 50% from August 27, citing New Delhi's continued imports of Russian oil. This move is expected to adversely affect Indian exports such as textiles, leather goods, and chemicals. Conversely, Russia has publicly backed India on its oil trade, criticizing US efforts to pressure India and China. In a positive development for trade, the India-EFTA pact has come into effect, making Swiss wines, chocolates, and apparel cheaper, while providing broader market access for Indian exports. Additionally, direct flights between India and China are set to resume from October 26 after a five-year hiatus, aiming to facilitate people-to-people contact and normalize bilateral exchanges.
Stock Market Performance and Outlook
Indian benchmark indices experienced mixed movements. On October 3rd, the Sensex and Nifty closed higher, supported by positive sentiments surrounding the RBI's policy decision. However, the broader market witnessed a downturn on October 4th, with both the BSE Sensex and NSE Nifty50 ending in negative territory. This underperformance has been attributed to factors such as disappointing corporate earnings, lackluster domestic consumption, high valuations, adverse tariff outcomes, and significant outflows from Foreign Portfolio Investors (FPIs), who withdrew Rs 1 lakh crore from Indian markets between January and September. Despite this, some brokerage firms issued positive ratings for specific stocks, with JP Morgan giving Dixon Technologies an "outperform" rating.
Looking ahead, shares worth Rs 2.57 lakh crore across 79 companies are slated to be unlocked between October and January as pre-listing lock-in periods expire. This massive supply could potentially impact secondary markets, though experts suggest strong institutional support and fundamentals might limit sharp declines for some companies.
Digital Economy and Financial System Upgrades
India is making significant strides in its digital and manufacturing sectors. The nation aims to become a $300 billion electronics production hub by 2026, with mobile phone manufacturing as a primary growth driver. Mobile phone production has seen a 28-fold increase between FY2014-15 and FY2024-25, and exports surged 127 times.
In a crucial financial system upgrade, the RBI is implementing a new cheque clearing system from October 4, 2025. This change will shift from batch-based processing to continuous clearing and settlement, potentially allowing funds from cheques to reach bank accounts within hours, significantly faster than the previous 1-2 business days.
Company-Specific News
Visa Steel Ltd. shares surged by 4.99% on October 3rd, ahead of a board meeting scheduled for October 4th to consider fundraising options, including the issuance of equity shares or other securities. E-commerce giant Flipkart announced its "Big Festive Dhamaka Sale" will commence on October 4th and run until October 8th, offering substantial discounts on high-end smartphones and other devices.