In September 2025, the Indian stock market continued to swing between challenges and opportunities. On one hand, the increase in US H-1B visa fees and rising India-US trade tensions put pressure on the market. On the other hand, interest rate cuts by the US Federal Reserve and GST reforms created a positive environment.
Let’s take a closer look at how the market performed in September 2025 and what investors can expect in the coming months.
September 2025: Market Performance
September was a mixed month for the Indian stock market. At the start of the month, Nifty and Sensex showed modest gains. However, in mid-September, following the announcement of US H-1B visa fee hikes, the Indian IT sector came under pressure. On September 22, IT stocks fell by roughly 3%, which dragged down the broader market.
By the end of September, Nifty closed at 24,611, while Sensex stood at 80,267. During the month, the PSU banking sector delivered the strongest performance, whereas the IT and FMCG sectors remained under pressure.
Major Triggers in September
US Federal Reserve Rate Cut: For the first time in 2025, the US Federal Reserve cut rates by 0.25% to support a weakening job market. This decision has raised expectations of increased foreign investment in emerging markets like India.
H-1B Visa Shock: The US government raised fees for new H-1B visas to $1,00,000, a sharp increase from previous levels. This is expected to add significant costs for Indian IT companies such as TCS and Infosys, potentially reducing their profits by 7% to 15%. The US accounts for up to 85% of revenue in the sector and provides on-site employment for 3% to 5% of industry employees. Following this announcement, IT stocks experienced sharp declines.
Strong Industrial Growth: In July, the Industrial Production Index (IIP) grew by 3.5%, with the manufacturing sector contributing a notable 5.4%. In August, production in key sectors such as coal and steel reached a 15-month high of 6.3%.
GST 2.0: The GST Council met on September 3-4 and approved a two-slab structure of 5% and 18%. This reform has lowered prices for over 400 products, expected to boost consumption during the festive season. Products including automobiles, electronics, and household items saw price reductions. The new GST rates have been effective since September 22.
US New Tariffs: From October 1, 2025, the US has imposed tariffs on several products, with the largest impact being a 100% tariff on branded pharma. India’s pharma exports in FY24 totaled $27.9 billion, with $8.7 billion (31%) destined for the US. While concerns remain, since India supplies over 45% of generic medicines to the US, these tariffs apply only to branded and patented medicines.
Generic medicines, which make up 85%–90% of India’s pharma exports, are exempt. Additionally, companies establishing plants in the US will receive exemptions. Overall, generic exports and local manufacturing strategies provide some buffer against these challenges.
September 2025: Sectoral Performance
In September, metals, defence, and PSU banks showed strength, while IT, tourism, and consumer durables were under pressure. Metals were supported by China’s economic reforms, and the auto sector benefited from the GST rate relief. Meanwhile, the IT sector faced setbacks due to the visa fee increase.
Overall, several sectors, including realty, IT, and media, saw declines. The PSU bank Index, however, performed relatively better.
What’s Next?
The next two months are crucial for the Indian market as two major factors are coming together: lower GST rates and festive season demand. This combination could give a strong boost to sectors like auto, retail, and consumer durables.
October will be particularly important as major companies like TCS and HDFC Bank begin announcing their Q2 results. Market direction will also be influenced by festive season sales data, updated GST collections, India-US trade relations, global geopolitical events, and FII inflows and outflows.
The companies mentioned in the article are for information purposes only. This is not investment advice.
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