September 24, 2025 | Defensive Rotation, IT Headwinds, and Gold at Record Highs

Good Morning & Market Recap

Good morning. Consolidation continues on Dalal Street as Indian equities closed marginally lower for the third consecutive session. The Nifty 50 slipped to the 25,170 zone, while the Sensex ended modestly lower. In contrast, Bank Nifty outperformed, signalling a defensive rotation into financials and domestically driven sectors.

What’s different today is the weakening global backdrop. GIFT Nifty futures point to a soft opening, while US markets snapped their recent record streak after Federal Reserve Chair Jerome Powell struck a cautious tone on rate cuts and flagged concerns around elevated equity valuations.

Overnight, Wall Street saw a tech-led pullback, gold hovered near record highs, and crude remained volatile amid supply-side headlines. The balance between global caution and domestic sector rotation will define near-term market direction.

Key watch factors today:

• Any fresh signalling from the Federal Reserve ahead of the US PCE data
• Dollar movement and USD/INR behaviour following recent reference prints
• Crude oil volatility linked to geopolitical and pipeline-related developments

Tech Pulse

H-1B Aftershocks Continue

The H-1B visa fee shock continues to ripple through India’s IT sector, shifting the discussion from near-term cost impact to longer-term business model evolution.

Despite headline pressure, industry data suggests resilience. Indian IT firms are increasing investments in local hiring and upskilling in the US, positioning themselves for higher-value service delivery and reduced visa dependency.

A key structural opportunity lies in Global Capability Centres. Elevated visa costs could accelerate offshoring to India, benefitting the domestic GCC ecosystem and related service providers.

At the same time, India’s semiconductor narrative remains intact. OSAT ramp-ups and electronics manufacturing investments continue to support a medium-term capex cycle across industrial and infrastructure suppliers.

Actionable trigger:
Watch management commentary from IT majors during earnings season. Firms articulating clear offshore scaling or GCC partnerships may outperform peers.

Funding Radar

India’s startup ecosystem continues to show resilience despite global headwinds. Recent weeks have seen renewed funding momentum across a broad set of sectors including semiconductors, social commerce, edtech, clean energy, and advanced materials.

The diversity of deal flow points to sustained investor confidence beyond pure fintech or consumer internet plays. However, digital lending remains a weak pocket, with funding activity sharply lower compared to prior years.

Overall, capital allocation trends favour infrastructure-linked, manufacturing-adjacent, and platform-driven business models.

Market Movers & Watchlist

Recent sessions highlight clear sectoral rotation.

Defensive and domestic-focused sectors such as PSU banks and metals have attracted institutional flows, while FMCG and IT have faced selling pressure. Banking stocks led gains, reinforcing confidence in balance-sheet strength and deposit franchises.

Key technical observations:

• Bank Nifty continues to outperform with resistance near recent highs and support holding well
• Nifty’s near-term support remains intact, but momentum is capped without broader participation

Rotation rather than outright risk-off behaviour continues to define market structure.

Quick Bytes

Gold remains firmly bid, touching fresh all-time highs as global investors hedge against macro uncertainty and prolonged rate-cut expectations. Even on sessions where tech corrects, bullion demand remains strong, reinforcing its role as a portfolio hedge.

Deep Dive – The Great Defensive Rotation

Recent market action reflects a deliberate shift toward defensive positioning. Institutional flows have rotated out of growth-heavy sectors into banks and metals, signalling preparation for a prolonged consolidation phase rather than a sharp correction.

Bank Nifty’s relative outperformance versus the broader market suggests confidence in domestic credit growth, balance-sheet health, and policy stability. This divergence becomes more meaningful against the backdrop of cautious global cues and uneven risk appetite.

Investor takeaway:
In a consolidating market, prioritise quality banking franchises and select cyclicals with domestic earnings visibility, while maintaining caution on sectors exposed to external policy shocks.

What to Watch Today

• Ongoing IPO activity and its impact on secondary-market liquidity
• Global cues following the recent US market pullback
• FII flow trends after recent bouts of selling

Quote of the Day

“Near-term risks to inflation are tilted to the upside, while risks to employment are skewed to the downside, highlighting the challenge of balancing the Federal Reserve’s dual mandate.”
— Market commentary following recent Federal Reserve communication

Compliance & Disclaimer

This newsletter is for informational purposes only and does not constitute financial or investment advice. All data is sourced from publicly available information and believed to be accurate at the time of publication. Past performance does not guarantee future results. Readers should consult a qualified financial advisor before making any investment decisions.

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