Indian benchmarks fell for a second month in September despite 7.8% official growth.
Why it matters: The divergence shows that economic growth does not automatically translate into equity gains. Foreign selling, currency risks and investor concerns about valuations and earnings weighed on the Nifty 50 and Sensex.
- Real GDP growth was an official first estimate of 7.8% year over year for April-June 2025, the first quarter of fiscal 2025-26.
- The Nifty 50 fell 6.1% in September 2025 to 22,620.45, while the BSE Sensex fell 5.8% to 72,480.29.
- Foreign portfolio investors sold about $2.7 billion of Indian equities in September and roughly $26.8 billion from January 1 through September 30, 2025.
- All 16 major sectors declined in September, while domestic mutual funds bought about 276.2 billion rupees through September 21.
India's real GDP grew 7.8% year over year in April-June 2025, the first quarter of fiscal 2025-26. The Ministry of Statistics and Programme Implementation described the figure as an official first estimate, which may be revised, in its GDP materials.
Equity benchmarks moved in the opposite direction. The Nifty 50 fell 6.1% in September 2025 to 22,620.45, and the BSE Sensex declined 5.8% to 72,480.29. Both posted their second consecutive monthly decline, according to market coverage of Indian shares and IT stocks.
Foreign portfolio investors recorded about $2.7 billion in net equity outflows in September, taking cumulative net equity sales to roughly $26.8 billion from January 1 through September 30, 2025. The figure refers to equities, not all-asset foreign-investor flows, and was based on NSDL data cited by a Reuters report republished by the Economic Times.
The Reuters report attributed the pressure in part to higher oil prices, which can increase India's current-account and inflation risks, and higher US and global bond yields, which can make dollar assets more attractive relative to emerging-market equities.
J.P. Morgan Asset Management's Ian Hui offered a separate analyst interpretation: strong macroeconomic data does not automatically produce strong equity returns. In an investor note, Hui pointed to reassessed earnings momentum, currency returns and India's exposure to the global artificial-intelligence investment cycle as possible explanations.
All 16 major sectors declined in September, while domestic mutual funds provided support through about 276.2 billion rupees of net equity purchases through September 21, according to the market report.
By the numbers
- 7.8% - official first estimate of year-over-year real GDP growth in April-June 2025
- 6.1% - September decline in the Nifty 50
- $26.8 billion - cumulative net foreign-equity outflows from January 1 through September 30, 2025
Yes, but: The GDP figure is a first estimate and may be revised. The market explanation also includes analyst interpretation, not only reported causes of the September decline.