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Key Takeaways
- Indian markets were volatile in August due to U.S. tariffs and FII selling, despite strong Q1 FY26 GDP growth.
- Key triggers for September include the GST tax overhaul, the U.S. Federal Reserve meeting, and U.S.-India trade tensions.
- Sectors like consumption, IT, and metals are expected to be in focus this month.
- Top stock picks for September from Swastika include NALCO, Aadhar Housing Finance, and Subros.
- Several IPOs, both mainline and SME, are expected to hit the market in September.
Navigating a Hopeful September: Indian Market Outlook and Key Triggers
After a challenging August, the Indian equity markets are looking toward September with a sense of cautious optimism. The previous month was marked by a continuation of the downtrend from July, creating a "tug-of-war" between robust domestic indicators and global headwinds. This market decline was primarily triggered by new U.S. tariffs on Indian exports, which sparked uncertainty and led to significant selling by Foreign Institutional Investors (FIIs). In fact, FIIs experienced their highest monthly outflow in seven months , with a net outflow of ₹46,902.92 crore.
This negative market sentiment occurred despite strong domestic performance, including a 7.8% GDP growth in the first quarter of fiscal year 2026 and cooling inflation. The resilience of Domestic Institutional Investors (DIIs) with a buying of ₹94,828.55 crore provided crucial support to the market.
Key Triggers for September: What to Watch 📈
The market's direction in September will be shaped by a blend of important domestic and global factors. Investors will be keeping a close eye on these key events:
- U.S. Federal Reserve Meeting: A key global event to watch is the upcoming U.S. Federal Reserve meeting. There's an expectation of a potential interest rate cut, which could weaken the U.S. dollar and attract FII inflows back into the Indian markets.
- U.S.-India Trade Tensions: The ongoing trade dispute over new U.S. tariffs on Indian exports continues to be a major headwind. Any positive developments or de-escalation of these tensions could significantly improve market sentiment and encourage foreign investment.
- Global Economic Data: Key economic indicators from major global economies like the U.S. and China, such as labor market reports and manufacturing data, will also influence foreign investor sentiment toward India.
- GST Tax Overhaul: The GST Council's decision to move to a simplified two-slab tax system (5% and 18%) is a big positive for the market. This change is expected to make many household goods and consumer durables cheaper, which could boost consumption in key sectors like auto and consumer goods. *
Sectors and Stocks to Watch 🔭
Based on these triggers, some sectors are expected to be in the spotlight this month.
- Consumption: The consumption theme will be a key focus due to the GST tax cut and the upcoming festive season.
- IT: The IT sector will be watched closely ahead of the U.S. Federal Open Market Committee (FOMC) meeting.
- Metal Stocks: Indian metal stocks may perform well amid China's Anti-Involution campaign.
- Export-related stocks: These stocks will remain in focus due to the ongoing trade tensions between the U.S. and India.
As for specific stock picks, here are a few recommended by Swastika for September:
- NALCO (National Aluminium Company Limited): The recommendation is to buy at a current market price (CMP) of ₹212, with a target (TGT) of ₹238 and a stop-loss (SL) of ₹199.
- Aadhar Housing Finance Ltd: The recommendation is to buy at a CMP of ₹514, with a TGT of ₹555 and an SL of ₹488.
- Subros: The recommendation is to buy at a CMP of ₹954, with a TGT of ₹1100 and an SL of ₹880.
IPOs: August Performance and September Expectations 💰
August saw mixed results from IPOs. Some, like Highway Infrastructure Ltd, had a strong listing gain of 64.29%. However, others like BlueStone Jewellery Ltd had a negative listing gain of -1.35%. A few of the expected IPOs in September 2025 include:
Mainline IPOs:
- Nilachal Carbo Metalicks
- Krupalu Metals
- Taurian MPS
- Karbonsteel Engineering
- Jay Ambe Supermarkets
- Airfloa Rail Technology
SME IPOs:
- Shringar House of Mangalsutra
- Dev Accelerator
- Urban Company (Urban Co.)
Frequently Asked Questions
Q1. What caused the market volatility in August 2025?
The volatility in August was primarily caused by a significant outflow of funds from Foreign Institutional Investors (FIIs) in response to new U.S. tariffs on Indian exports.
Q2. What is the "tug-of-war" mentioned in the report?
The "tug-of-war" refers to the market being pulled in two different directions: negative global factors like U.S. tariffs and positive domestic factors such as robust GDP growth and cooling inflation.
Q3. Why are FIIs and DIIs important?
Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) are key market participants whose buying and selling activity significantly influence market direction. In August, DIIs' buying of ₹94,828.55 crore helped support the market against FIIs' selling.
Q4. What is the GST tax overhaul and how will it affect the market?
The GST tax overhaul is the GST Council's decision to shift to a two-slab system (5% and 18%). This is expected to make many products more affordable, which could boost consumption and benefit sectors like consumer goods and autos.
Conclusion
Your Partner in Informed InvestingThe Indian market is dynamic, with global and domestic factors constantly shaping its direction. While August was a reminder of this volatility, September offers renewed hope based on promising domestic triggers and potential global shifts.Navigating these market cycles requires a blend of timely information, expert analysis, and a robust trading platform. At Swastika Investmart, a SEBI-registered member of major exchanges, we provide all of this and more. From comprehensive research to tech-enabled trading and dedicated customer support, we are here to help you make informed decisions.Open an account today and take the first step towards smarter investing.
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