The first half of September 2025 has been a mixed bag for India’s markets. Strong GDP upgrades and corporate action were offset by softer mutual fund inflows, regulatory changes, and sector-specific challenges. Here are the highlights:
🚀 Fitch Upgrades India’s Growth Outlook
India reported a 7.8% GDP growth in Q1FY26, prompting Fitch Ratings to upgrade full-year FY26 growth to 6.9% from 6.5%. The boost is led by strong domestic demand and consumption. Fitch also highlighted the impact of GST reforms and expects the RBI to cut rates by 25 bps in October 2025, but flagged risks of rate hikes in 2027 due to inflation and Trump’s tariff plans.
🏦 Insurance Industry Pushback on GST Cuts
While the 56th GST Council cut GST on life and health insurance premiums from 18% to 0%, insurers raised concerns as input tax credit (ITC) benefits are no longer available. CEOs have already met the finance minister and are preparing to escalate their demands to the CBIC, arguing this change hurts operational margins.
📉 SIP and MF Inflows Ease in August
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SIP flows stood at ₹28,265 crore in August, slightly lower than July, with SIP accounts dipping from 9.11 crore to 8.99 crore. The stoppage ratio rose to 74.5%, showing signs of fatigue.
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Mutual fund inflows also moderated — equity MFs saw ₹33,430 crore net inflows, down from ₹42,702 crore in July. Flexi-cap, mid-cap, and small-cap funds led the way, while debt funds witnessed outflows.
🤖 Reliance Bets Big on AI
Reliance Industries has incorporated Reliance Intelligence, a 100% subsidiary to spearhead its AI ambitions. Plans include gigawatt-scale AI-ready data centers, global partnerships, and AI-driven services across education, healthcare, agriculture, and MSMEs. This initiative positions RIL to be at the forefront of India’s deep-tech revolution.
🎨 Paint Wars: Birla vs. Asian Paints
Asian Paints, long the market leader, saw its share drop from 59% to 52%, with Birla Opus capturing 6.6% of the market. Birla’s heavy investments in contractor training and direct-to-consumer campaigns, coupled with its presence in 6,000 towns, are reshaping competition in India’s decorative paints segment.
👕 Textile Sector Faces U.S. Tariff Pain
ICRA warned that 50% U.S. tariffs on Indian textiles could hit revenues by 6–9% in FY26 and squeeze margins by up to 300 bps. With the U.S. accounting for 33% of India’s textile exports, alternate strategies may not offset short-term losses.
📉 Discount Brokers Lose Clients
Top discount brokers — Groww, Zerodha, Angel, and Upstox — lost nearly 20 lakh clients in H1 2025. This exodus was triggered by stricter margin norms, curbs on weekly expiries, and higher taxation. While full-service brokerages remain relatively unaffected, the SEBI clampdown on retail F&O trading is hitting discount brokers hard.
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