Since India was expected to drive one-fifth of global growth in the coming decade by Morgan Stanley several factors have come into play right from tariffs, rise in geo-political tensions, and shift in the world order, however, the south Asian country still remains to be a bright basis the strong policy push to revive domestic growth is expected to keep inflation and fuel demand in check.
In September 2025, Indian equity indices saw a modest recovery in with “BSE Sensex and NSE Nifty up 0.6%/0.8%” respectively, as per a HSBC Global Navigator report.
While Reserve Bank of India (RBI) left key interest rates unchanged and maintained a neutral policy stance during its policy meeting on Oct 1, 2025 it did announce regulatory changes to support credit growth.
Nifty consensus EPS estimate for CY25/26 saw a -1%-1% change respectively during Sep as per Bloomberg. Nifty now trades on 19.9x 1-year forward PE, according to the HSBC report. This is now in-line with its 5-year average and a -10% premium to its 10-year average, it said.
Meanwhile, economists estimate US tariffs could have a 0.4% -0.8% negative impact on India’s GDP growth.
In terms of a consumption based economy, “the GST rate cut announced by the government along with the previously announced income tax rate cuts should significantly help boost private sector consumption and help boost private capex in the current times of global uncertainty.”
Meanwhile, the growth cycle in India may be bottoming out, it said.
“Interest rate and liquidity cycle, decline in crude prices and normal monsoon are all supportive of a pick-up in growth going forward, it added.
On the other hand, the “global trade related uncertainty remains a headwind to private capex” in the near term, expect “India’s investment cycle to be on a medium-term uptrend supported by government investment in infrastructure and manufacturing, pickup in private investments and a recovery in real estate cycle”.
The brokerage report further expects higher private investments in renewable energy and related supply chain, localization of higher-end technology components, and India becoming a more meaningful part of global supply chains to support faster growth.
Notably, MSCI World index rose 3.1% in Sep led by US (S&P 500) rising 3.5%. MSCI Europe rose 1.9% and MSCI Japan rose 1.6%. MSCI EM rose 7% supported by a whopping 9.5% jump in MSCI China, it said.
