September 2025 Equity Market Forecast

Equity markets experienced significant challenges in the month of August. The US government’s decision to impose a 50% tariff on Indian goods, combined with moderate earnings growth domestically, and an increase in 10-year bond yields, led to a decline in equity valuations. However, there was some relief when the government announced a reduction in GST slabs to boost consumption and alleviate cost pressures across different industries.

Four seasoned fund managers – Alok Agarwal, Dhrumil Shah, Dikshit Mittal, and Rajesh Bhatia – shared their perspectives on the potential developments in the equity markets for the month of September with Cafemutual. Each manager highlighted different aspects to keep an eye on in the coming month.

Alok Agarwal is closely monitoring the ongoing trade discussions between India and the US. Dhrumil Shah anticipates positive effects from the revised GST rates, especially in sectors like consumption, consumer durables, and automobiles. Mittal emphasized how the outcome of trade negotiations between India and the US could significantly impact various economic factors, including rupee stability, foreign investor flows, corporate profitability, and broader export-driven industries. Bhatia hopes for better tariff agreements with the US but warns of potential market corrections or slowdowns if the current tariff situation persists. He also stressed the importance of government measures in overcoming export risks.

Despite the uncertainties in the short term, all four fund managers maintain a positive outlook on equities in the medium to long term. Agarwal believes that constructive developments, such as resolving tariff disputes, could steer markets in a positive direction given India’s underperformance compared to global peers over the past year. Shah remains cautious in the near term due to the potential negative impact of the “Trump tariffs” on export-oriented sectors. However, he sees hope in the medium term, especially with corrections in price-to-earnings multiples. Mittal highlighted the current era of heightened uncertainty in the Indian equity markets influenced by both local and global factors.

In conclusion, the month of September could see notable shifts in the equity markets based on the outcomes of trade negotiations, policy decisions, and economic indicators. Fund managers suggest that positive developments in tariff agreements and GST reforms could potentially pave the way for a more favorable market environment in the coming months. Amidst turbulence and unpredictability, the managers remain cautiously optimistic about the prospects for equities in the medium to long term.