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PL Wealth, the wealth management arm of PL Capital (Prabhudas Lilladher) has released its Market Outlook – September 2025, highlighting India’s resilient macroeconomic momentum despite global challenges. It retains a positive long-term outlook for Indian Equities, backed by a normal monsoon, sustained policy reforms, government capex, and the financialization of savings which continue to underpin India’s growth trajectory.

The report notes that India’s GDP for Q1 FY26 surprised on the upside at 7.8% YoY, aided by robust manufacturing, front-loaded government capex, and a favorable deflator, outperforming expectations of 6.9%. The outlook has been further buoyed by the GST rationalization effective September 2025, which is expected to lift growth by 0.2–0.3%, spur consumption, and ease inflationary pressures. Adding to the positives, S&P upgraded India’s sovereign rating to BBB (stable) after 18 years, citing growth resilience and fiscal prudence. While, CPI inflation dropped to a 97-month low of 1.55% in July 2025, creating policy space for rate cuts. Services activity also remains robust, with the Services PMI at a 15-year high of 62.9 in August.

However, PL Wealth notes that challenges for India still persist. India faces 50% tariffs on exports to the U.S., among the steepest globally, impacting textiles, auto components, leather, gems, and shrimp. Foreign portfolio investors pulled out USD 4 billion in August, marking the largest monthly outflow in seven months. While, Punjab’s worst floods in four decades have damaged crops over 1.75 lakh hectares, raising concerns about rural incomes. Also, the merchandise trade deficit widened to USD 27.4 billion in July, an eight-month high, while urban demand remains fragile.

According to Inderbir Singh Jolly, CEO, PL Wealth Management, “India’s structural growth story remains intact with reforms, capex momentum, and low inflation providing strong tailwinds. While tariff headwinds and global volatility weigh on near-term sentiment, we believe disciplined investors can use market volatility to accumulate quality assets for long-term wealth creation”.

Equity Market Outlook

In the short term (1–3 months), PL Wealth advises caution as U.S. tariff uncertainties, foreign portfolio investor (FPI) outflows, and weak earnings trends continue to add volatility. It recommends focusing on large-cap exposure and using staggered entries to manage timing risks. It believes that sectors with high U.S. exposure, such as pharma, auto components, and select industrials, remain most at risk. For the medium term (6–12 months), PL Wealth stance shifts to cautiously constructive. It believes that if volatility stabilizes, opportunities may emerge in mid- and small-cap segments, as well as in domestic demand-driven sectors like consumption, infrastructure, and retail.Over the long term (2–5 years), PL Wealth retains a positive structural outlook. It says that a normal monsoon, sustained policy reforms, government capex, and the financialization of savings continue to underpin India’s growth trajectory. The firm sees significant opportunities in high-quality large caps and selectively researched mid- and small-cap names.

Fixed Income Strategy

PL Wealth maintains a neutral stance with a positive bias at the long end, recommending selective additions in G-Secs and SDLs. Short-tenor AAA corporates remain preferred for accrual, while credit risk appetite stays muted. It notes that bond markets remain sensitive to fiscal concerns and global tariff risks. The 10-year G-sec yield rose 14 bps since July to 6.51%.

Currency Outlook

The rupee weakened to 87.85/USD in August, pressured by tariffs and equity outflows. RBI has allowed gradual depreciation while ensuring orderly movement. In the near term, INR is expected to remain in the 87.5–88.5/USD corridor, with medium-term stabilization projected in the 86–88/USD range. However, further escalation in tariffs could push the currency closer to 90/USD.

“Markets are navigating global volatility with resilience, but the near-term picture remains clouded by tariffs and FPI outflows. We continue to believe that disciplined, long-term investors should use volatility to build exposure to quality companies, while fixed income and precious metals provide tactical opportunities in the current environment,” added Inderbir Singh Jolly, CEO, PL Wealth.

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