In September 2026, global pressures overpowered India’s growth story. Oil above $100, inflation at a 20-month high, and a US rate hike pulled the Nifty down 6.4%, even as GDP grew 7.8%. Pharma, deal-making and infrastructure orders held up regardless.

Here’s what happened, and why it mattered.

Markets Last Month 🔦

September Sell-Off: Global Pressures Eclipse Domestic Growth

September was tougher for Indian stocks compared to August. The Nifty 50 dropped 6.4%, and the Sensex fell 6.1%, marking a second month of losses. By September 29, the Nifty was down 13.4% for the year and had slipped below 23,000. Mid-sized companies did even worse, with the Nifty Midcap 100 down 7.4%. Only the smallest companies performed a bit better, as the Smallcap 100 fell 4.15%.

Investors became more anxious as the month progressed. The India VIX, which had dropped in August, jumped about 26% in September, with most of the rise happening in the last week.

IT stocks saw the biggest drop, with the Nifty IT index down 11.4%. Consumer stocks, including auto companies, also fell sharply.

Most of the selling was caused by broader economic pressures. After US strikes on Iran on September 2, Brent crude oil went above $100 a barrel and kept rising, reaching $130.54 on September 15. It stayed above $100 and finished the month at $114.46, up 27.5%. The government increased the windfall tax on fuel exports, and prices for LPG and jet fuel also went up. August’s CPI inflation was 4.82%, the highest in 20 months and the third month in a row above the RBI’s 4% target. Internationally, the US Federal Reserve raised interest rates by 25 basis points on September 17. The US 10-year Treasury yield climbed 51 basis points during the month to 5.23%, staying above 5% from September 16 onward.

In contrast, India’s economic growth stayed strong. GDP grew by 7.8% in the first quarter, and Moody’s increased its growth forecast for India in FY27 to 7%.

However, in September, broader economic factors mattered more than company fundamentals. High oil prices, rising inflation, and tighter financial conditions in both India and the US all happened at once. Strong growth numbers and steady business did not make up for these pressures. Right now, Indian stocks are being influenced more by global politics and interest rates than by local factors, and India cannot control these.

US Bond Yields Are Rising. Why Should Indian Investors Care?

When US bond yields go up, the effects are felt beyond America. These changes can influence Indian stocks, bonds, and the rupee, since US Treasury yields serve as a global benchmark for the cost of money.

A bond is basically a loan to a government. The yield is the return an investor expects from owning the bond. Bond prices and yields move in opposite directions: when investors sell bonds, prices drop, and yields rise.

Why does this matter to India? US Treasury bonds are among the world’s most liquid and closely watched investments. When their yields rise, global investors have to reassess the trade-off between safety and risk. The question becomes: Why take additional risk in emerging markets if US assets now offer a higher return? India can still attract capital because of its growth potential, but investors may demand higher returns to take on the additional risk.

This issue is especially important right now. On 30 September 2026, the US 10-year Treasury yield was about 5.23%, and the 30-year yield was around 5.56%. In comparison, the Indian 10-year government bond yield was about 7.15%, and the rupee traded close to ₹95.98 per dollar. For Indian investors, the link is clear: higher US yields can strengthen the dollar, shift foreign investment flows, put pressure on Indian bond prices, and hurt expensive growth stocks by lowering the value of future earnings. If the rupee weakens, the effect can be even bigger, since imports priced in dollars, such as crude oil, become costlier.

Pharma Powers Ahead: Sun Pharma Leads a Month of Deal-Making

The Nifty Pharma Index has been one of the better-performing indices in the Indian markets this year. As of September 29, the Nifty Pharma Index has risen 16.8% for the year, while the Nifty 500 fell by 7.7%.

Sun Pharma was the major news maker this month. It signed an exclusive global licensing deal with LIB Therapeutics for lerodalcibep, a third-generation PCSK9 inhibitor that lowers LDL cholesterol, covering all markets except the US and China. The drug received approval from the European Commission on September 21, and Sun plans to sell it globally through the sales network from the Organon deal. In the US, Sun launched CTaro-Methylphenidate ER, the first bioequivalent generic to Concerta with an osmotic delivery system. The company also took part in a White House event focused on medicine pricing transparency and access.

Other companies also expanded their product pipelines. Cipla signed two licensing deals: one for a Keytruda biosimilar in the US, targeting the 2028 patent expiry, and another for a HER2 antibody-drug conjugate from Sino Biopharma worth up to $123 million. Dr Reddy’s gained exclusive Indian distribution rights for Qdenga, the country’s first dengue vaccine, and launched a nivolumab biosimilar. Novartis India acquired Pfizer’s Minipress brands for ₹1,250 crore, and its stock has nearly doubled this year.

IPOs and M&A Keep Deal-Making Alive in a Weak Market

Even though markets fell in September, deal-making in India continued. Here are three transactions that highlight where investors are putting their money.

NSE has finally gone public. The exchange first filed for an IPO in 2016, but the process was delayed for years due to SEBI’s review of issues such as co-location, governance, and its clearinghouse setup. NSE listed on the BSE on September 24, 2026, since exchanges cannot list themselves to avoid conflicts of interest.

The ₹22,561.57-crore IPO was a full offer-for-sale, so all proceeds went to selling shareholders like global private equity firms, public sector banks, and insurers. NSE itself did not receive any funds. Bank of Baroda planned to sell a 35% stake. The anchor investors, including LIC, Norges Bank from Norway, and Abu Dhabi’s ADIA, put in about ₹6,745 crore.

The listing was low-key. Shares were issued at ₹1,785 and started trading at ₹1,800, just 0.84% higher. With the Nifty down more than 6% that month, even a steady debut was notable. It showed that long-term investors still supported India’s market infrastructure, even without a big first-day jump.

Airtel Money took a different approach. Bharti Airtel’s payments business filed for an $800 million IPO in London, targeting a valuation of $8-$9 billion. This is also a secondary sale, so the company will not get new capital. Instead, this Indian fintech is looking to attract global investors, not just those in India.

In IT services, consolidation happened through a share swap. Happiest Minds is merging with ITC Infotech, and its shareholders will get 25 ITC Infotech shares for every 81 Happiest Minds shares they own. ITC will hold a 22.1% stake and become the main promoter of the new AI-focused company, which aims for $1 billion in revenue by FY28 across banking, healthcare, and education technology.

Infrastructure Order Flow Remains Strong Despite Market Weakness

In September, infrastructure and power companies continued to win new orders, even though the broader market declined.

Power Grid led the transmission sector, winning several projects through competitive bidding. These included one project with annual transmission charges of ₹ 3,244 crore and another worth ₹1,152 crore. The company secured another win late in the month, emerging as the successful bidder for a major inter-state transmission project in Maharashtra, with annual transmission charges of ₹430.67 crore. The project further strengthens POWERGRID’s power evacuation pipeline in the Western Region. GE Vernova T&D India was the lowest bidder for a 6,000-MW HVDC terminal station, helping its stock rise by over 8%. In the renewables sector, Inox Wind received another ₹755 crore order from IOC for a 100 MW wind project.

The rail sector had the most notable contract of the month. BEML received a ₹5,400 crore order for trainsets and maintenance for the Mumbai–Ahmedabad bullet train, which is about five times its previous order book. However, the stock increased by only 3.5%.

Construction and industrial companies also saw new orders. Dilip Buildcon won a ₹1,800 crore LPG pipeline contract and sold 51% of a transmission asset to keep its business asset-light. Rashtriya Chemicals & Fertilisers got a ₹797 crore purchase order from L&T. Sical Logistics secured a ₹535 crore coal-mine development contract from Central Coalfields, which pushed its shares up by about 5%.

Order flow remains strong, but the market is reacting selectively as investors consider high costs and global uncertainty.

This extends the pattern we flagged in our July letter: Corporate India’s Industrial Sector: Aggressive Capex Amid Margin Softness.

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