Pranjul Bhandari, Chief India Economist at HSBC, said activity stayed strong despite being slightly below August’s high. The Future Activity Index reached its highest level since March, reflecting optimism among services firms.

The services sector continues to benefit from strong demand, new business activity, and a positive outlook. It remains a key contributor to India’s economic performance this year.

India’s manufacturing sector also maintained growth in September, though at a slower pace. The HSBC India Manufacturing PMI fell to 57.7 from 59.3 in August. Manufacturing output grew steadily, with stable employment and inventories, showing confidence in upcoming business prospects. Analysts said both sectors’ slight moderation does not affect the overall growth momentum, supported by steady domestic demand, policy stability, and improved business confidence.

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Nifty Bank declined slightly by 26 points to 55,258.45, while Nifty Midcap 100 slipped 12 points to 58,686.55. The Nifty Smallcap 100 index gained 4 points to reach 18,293.15. Experts said near-term Nifty trends will depend on support between 25,200 and 25,000 levels.

Top Sensex gainers included Maruti Suzuki, M&M, Tata Motors, Infosys, HDFC Bank, Tech Mahindra, and Axis Bank. Ultratech Cement, Sun Pharma, Trent, and Asian Paints were the main losers. Asian markets mostly traded higher, except Hong Kong and China.

Foreign institutional investors (FIIs) were net sellers, offloading equities worth Rs 2,910 crore on September 22. Domestic institutional investors (DIIs) purchased Rs 2,583 crore. Analysts said FII selling since 2024 has impacted markets due to high Indian valuations compared to global opportunities.

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In August, the RBI kept the policy rate at 5.50 per cent after previous easing. Dr Soumya Kanti Ghosh, SBI’s Chief Economic Advisor, said CPI inflation could drop another 65-75 basis points due to GST cuts. Without GST changes, CPI is already below 2 per cent in September and October.

Ghosh added that the 2019 GST rationalisation reduced inflation by 35 basis points in just months. With the new CPI series and base revisions, inflation should stay near the lower end of the RBI target, 4±2 per cent, through FY26 and FY27. October CPI could even reach 1.1 per cent.

SBI believes a September rate cut is justified. Ghosh said the RBI must communicate clearly to avoid mistakes. Lower inflation and stable growth give the central bank room to cut rates and support the economy.

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