Market Outlook, Early September 2025

September’s bends need balance. Trade shocks, a record USD/INR, and shifting cues in oil, gold, and GST mean the lane for gains is narrower, so the edge goes to businesses with visible earnings and tight risk control, while compounding does the heavy lifting once quality is secured. 

GST reforms: what changed and why it matters now 

The GST Council has cleared a simpler two‑slab regime of 5% and 18% with wide‑ranging rate cuts effective September 22, including zero GST on individual life and health insurance, lower rates on small cars, two‑wheelers, durables and many essentials, and an 18% rate on cement to ease construction costs. It’s a clear push to revive consumption and lower compliance friction. With price points resetting into the festive window and companies guiding quick pass‑throughs, the street expects faster demand traction in entry autos, staples with deep rural reach, and building materials linked to housing and infra.  

Equities saw a swift bid through early September as investors priced a consumption boost from the two‑slab GST, with Sensex and Nifty rallying on autos, FMCG, durables and cement leadership, and dips likely being bought into the September 22 effective date as channel checks guide follow‑through; flows tilted toward consumption baskets, while late profit‑taking reflected digestion of sector winners and possible fiscal trade‑offs, so the near‑term setup favours autos on lower on‑road prices, staples on improved volume visibility, and cement on easing construction costs, with management commentary on pass‑through timelines acting as the main catalyst. 

Currency: USD/INR at new highs 

USD/INR is hovering around lifetime highs near 88, with last week’s breach of the 88.3 zone confirming pressure from stronger USD, tariff headlines, and importer demand for dollars, especially oil. Intraday volatility has risen because offshore position clean‑ups and equity swings are feeding rapid two‑way moves, even as traders watch the 87.95–88.30 band as near‑term markers. Near term, desks expect an 87.5–88.5 range as markets balance tariff uncertainty, FII outflows, and RBI’s measured presence in the market. 

The record high is because of higher US yields keeping the dollar bid, month-end/importer demand, tariff-related caution on FDI/flows, and a wider goods deficit even as oil softens. Practically, exporters should advance hedges on receivables, while importers can stagger cover to avoid poor fills during headline spikes. 

Crude oil: a timely cushion 

Based on current projections, Brent remains soft through FY26 H2 as global balances move into surplus, with inventory builds concentrated in FY26 Q3–Q4 (Oct–Dec 2025 and Jan–Mar 2026), creating a cushion against FX‑driven imported inflation and supporting margins for energy‑intensive sectors and logistics; use this tailwind selectively because a reversal is possible if OPEC+ alters supply discipline, so plan procurement and hedges in staggered tranches across FY26 Q3–Q4 rather than a single‑shot bet.  

Gold and silver: breakout hedges 

Gold and silver have rallied to new records on MCX as global rates cut hopes build and dollar strength stalls, with COMEX prices firm and MCX October gold spiking past ₹1.05 lakh per 10gm equivalent on momentum flows; silver is also climbing on industrial demand hopes and safe‑haven bid. With MCX gold printing fresh all‑time highs this week and COMEX gold near multi‑year peaks, the tactical bid remains supported by growth uncertainty and falling real‑rate expectations into the Fed meeting cycle. Allocation‑wise, a 5–10% strategic sleeve in precious metals can stabilise portfolios during FX and policy shocks; traders can trail stops given elevated volatility. 

Steel safeguard duty: market impact 

India’s safeguard duty of 12% imposed earlier this year to counter cheap imports is under active discussion, with the DGTR having recommended a three‑year glide path (12%/11.5%/11%) replacing the expiring duty, and industry lobbying for higher rates amid Chinese dumping pressure. Since imposition, steel imports have eased, domestic prices rebounded ~14% YTD by June, and listed producers’ profitability improved, though end‑users face tighter input costs versus last year’s lows. Equities are reacting with a split: integrated steel producers bid on pricing power, while steel‑heavy consumers in autos/construction manage through pass‑throughs and mix; Nifty Metal’s choppiness reflects this push‑pull. 

RBI: inflation, PMI and growth 

Policy remained on hold in August at 5.5% repo, with CPI forecast trimmed to 3.1% for FY26 and GDP held at 6.5%, signalling liquidity support and confidence in domestic engines despite external shocks. August PMI surprised on the upside: services hit a 15‑year high and composite PMI printed a record zone above 63, indicating strong demand and robust order books even as output‑price inflation quickened on cost pass‑throughs. The mix says growth momentum is healthy, but price pressures in services could slow headline disinflation from recent lows, so policy patience is likely. 

Trade shocks: still the key overhang 

The extended US tariff regime on Indian goods keeps uncertainty elevated, with exemptions for pharma/energy but ongoing risk of changes that complicate pricing and logistics. Exporters in textiles, gems, chemicals and auto components face margin pressure into the US corridor, while diversified, IP‑led exporters show better resilience. Portfolio construction in September should reflect this dispersion: reduce thin‑spread commodity exporters, maintain selective exposure to value‑added niches. 

Equity stance for September 

Indices are range‑bound with a negative bias as tariff, FX and flows cap animal spirits; rotations dominate under the hood. Domestic demand, government capex and liquidity support a base for banks, capital goods, utilities and rail/transmission ecosystems, while IT/pharma/FMCG see profit‑taking and exporters reprice risk premia. Expect dispersion to stay high and portfolio churn to rise; this is a stock‑picker’s tape. 

What to do now 

• Currency: advance or stagger hedges based on cash‑flow timing; exporters keep higher cover ratios while 88 holds, importers avoid panic cover during spikes and use RBI windows if liquidity improves. 

• Commodities: treat crude softness as a margin tailwind and a chance to add quality cyclicals; keep a strategic gold sleeve and trade silver with tighter risk because of higher volatility and industrial sensitivity. 

• Steel: favour integrated producers and balance with end‑users that have pass‑through ability; avoid leveraged midcaps exposed to import‑price whipsaws. 

• Equity allocation: overweight domestic compounding franchises and capex beneficiaries; selective exporters with pricing power and diversified markets; underweight thin‑spread, tariff‑exposed midcaps until clarity improves. 

At Maxiom Wealth, Roots & Wings anchors capital to cash‑flow compounding and governance, and LSG adds a lens for liquidity, supply‑chain resilience and growth optionality. the exact edges needed in a high‑noise, high‑dispersion market. The aim is simple: own businesses that can price, pivot suppliers, and reinvest at high incremental ROCE so portfolios grow steadily through policy cycles. 

To sum up, respect the USD/INR breakout, use oil softness to fortify margins, keep gold as a shock absorber, and stay selective in steel. The playbook for September is patience, quality, and position sizing because compounding, like a well‑timed overtake on the Pune expressway, needs space and discipline more than speed.