The Indian equity benchmarks, Sensex and Nifty, closed higher in three of the five trading sessions this week, climbing to two-month highs on renewed optimism following the revival of India-U.S. trade talks and the U.S. Federal Reserve’s first rate cut of 2025. Toward the end of the week, however, the markets witnessed some consolidation as investors locked in profits at elevated levels.   

For the week, the BSE benchmark Sensex gained nearly 0.89% to settle at 82,626, while the Nifty climbed 0.85% to 25,327 mark, as sentiment was buoyed by GST reforms and strong domestic macro data. In line with benchmark indices, the broader markets also ended in positive terrain, with midcap and smallcap indices managing to close with modest gains.

On the sectoral front, realty, energy, and pharma were among the top performers, while IT and FMCG stocks faced selling pressure.

“The broader indices, especially smallcaps, delivered a strong catch-up rally, highlighting the improvement in risk appetite toward mid- and small-sized stocks,” said Ajit Mishra – SVP, Research, Religare Broking.

FIIs sell Indian equities worth ₹10,570 cr in Sept

Foreign institutional investors (FIIs) showed renewed buying interest in Indian equities this week, while domestic institutional investors (DIIs) remained steady buyers.

During the week, FIIs were net buyers in three out of five sessions, injecting a total of ₹1,066 crore, but they sold equities worth ₹2,393 crore in the other two sessions—September 15 and 17. Overall, FIIs remained net sellers for the month-to-date, withdrawing ₹10,572 crore.

In contrast, DIIs continued to provide strong support, infusing ₹11,177 crore over the past five sessions. Cumulatively, they have invested ₹38,324.69 crore so far in September.

"Robust domestic institutional inflows offset FII selling, cushioning downside risks and sustaining the recent rally," said Vinod Nair, Head of Research, Geojit Investments.

He added that with resilient domestic fundamentals and a weakening U.S. dollar, conditions appear favourable for renewed FII inflows, which could further support Indian equities in the week ahead.

Key triggers for market this week

In the coming week, the major trigger for the India share market will be U.S. President Donald Trump’s executive order, announced late Friday, imposing an annual fee of $100,000 on H-1B visas.

“While export-driven sectors are already grappling with tariff-related pressures, this move could further weigh on IT services exporters at a sensitive time when trade negotiations remain underway,” said Ajit Mishra of Religare Broking.

On the macro front, HSBC’s Composite, Manufacturing, and Services PMI flash estimates for September are scheduled for release on September 23, followed by banking data on loan and deposit growth, as well as foreign exchange reserves, on September 26. Globally, investors will be closely monitoring the performance of U.S. markets in the aftermath of the Fed’s rate cut, he said.

Geojit’s Vinod Nair said that as GST rationalisation is set to take effect this week on September 22, and festive demand is expected to strengthen, investor attention will shift toward consumption-driven sectors.

“Going forward, investors will closely track key U.S. macro indicators—including GDP, jobless claims, and core inflation—for cues on the Fed’s policy trajectory. On the domestic front, the upcoming manufacturing PMI will serve as a timely barometer of industrial sentiments, offering early signs of a much-awaited demand revival,” Nair said.  

He said that investors should focus on resilient, domestic-facing sectors, maintain exposure selectively, and avoid aggressive long positions until clearer directional signals emerge. A buy-on-dips strategy remains preferable, particularly in cyclical areas such as autos, capital goods, and metals.

Technical Outlook

According to analyst at Religare Broking, Nifty is approaching its trendline resistance zone near 25,500. “A decisive breakout could pave the way for a move toward 25,750. On the downside, the 24,900–25,150 zone is expected to act as strong support in the event of profit-taking.”

The Bank Nifty displayed resilience during the week, but underperformance in private sector banks continues to restrict momentum. “We maintain our target zone of 56,000–56,200, with scope to extend toward 56,700 if strength persists. On the downside, it is critical to hold 54,900 as immediate support; a breach could extend declines toward 54,400,” the report added.

Meanwhile, midcap and smallcap indices remain in recovery mode, with smallcaps catching up strongly. However, recent price action lacks conviction, suggesting the possibility of short-term profit-taking or consolidation, Mishra said.