Investment Ideas Note – October 2025 – Wallet Wealth

 

Investment Ideas Note –

 October 2025 – Wallet Wealth

by S.Sridharan, Founder, https://www.walletwealth.co.in/ 

 

GST Reforms: Major Simplification of the Tax Regime

In September, the GST Council approved sweeping reforms aimed at simplifying India’s indirect tax structure. The earlier four-tier system that is 5%. 12%, 18% and 28% has been streamlined into just 2 slabs that is 5% and 18%, reducing complexity for businesses and consumers alike.

Essential food items such as milk, paneer, and bread, along with educational materials like maps, charts, and stationery, as well as 33 life-saving medicines, have now been exempted from GST. Several specific food items, personal care products, and key sectors have been moved to the lower GST slab. Additionally, the maximum tax rate has been cut from 28% to 18%.

This rationalization is expected to enhance affordability, improve compliance, and drive consumption across the economy.

 

SEBI’s Stance on Insider Trading

SEBI has issued a stern warning to listed companies regarding increasing instances of insider trading. It has emphasized the importance of robust compliance mechanisms and recommended the use of advanced technological tools to monitor trading activities, especially when trading windows are closed. Banks and listed firms are urged to strengthen internal controls and ensure sensitive information is adequately protected.

 

Market Performance – September 2025

Index Performance Snapshot

Index	1 Sep 2025	30 Sep 2025	Change
BSE Sensex	79,828.99	80,267.62	+0.55%
BSE Midcap	45,373.66	44,916.33	-1.01%
BSE Small Cap	52,216.64	52,195.09	-0.04%

 

Indian equities mirrored broader Asian optimism in early September, supported by global developments like the reduction of U.S. tariffs on Japanese autos from 27.5% to 15%. However, concerns over U.S. tariff policy moderated the momentum, and markets ended the month with modest gains, aided by optimism around GST reforms.

Index	September Return
NIFTY 50	-0.06%
Nifty Midcap 150	-0.35%
Index	September Return
Nifty Bank	+1.17%

 

Banking Sector Outperforms

The banking sector, particularly PSU banks, outperformed in September. Supportive monetary policy, lower interest rates, improved credit demand, and possible sectoral rotation away from underperforming IT and consumer durables contributed to the Bank Nifty’s strength.

 

SEBI to Ease IPO Regulations

To sustain India’s IPO momentum, SEBI is planning to reduce the IPO approval timeline from 6 months to 3 months. Leveraging AI for document scrutiny and coordination with merchant bankers is expected to speed up the process.

•      IPOs worth $13 billion have already been approved.

•      An additional $18.7 billion worth of IPOs are currently awaiting approval.

This move is expected to deepen India’s primary market and boost capital formation.

 

RBI’s New Regulatory Framework for Payment Aggregators

The Reserve Bank of India (RBI) has introduced a new regulatory framework for payment aggregators (PAs), effective immediately. Key highlights:

•      Minimum net worth of ₹15 crore at the time of application.

•       Minimum net worth of ₹25 crore by the end of the third financial year post-authorization.

The new framework aims to strengthen trust, resilience, and innovation in India’s rapidly expanding digital payments ecosystem.

 

FII and DII Activity – September 2025

Category	Equity (₹ Cr)	Debt (₹ Cr)	Total (₹ Cr)
FII	-18,927.89	+2,886.19	-16,041.70
MF (DII)	+46,442.10	-55,946.47	-9,504.37

 

Foreign Institutional Investors (FIIs) were net sellers in equities in September, driven by factors such as attractive U.S. bond yields, potential Fed rate hikes, a strong dollar, stretched Indian equity valuations, and global tariff concerns. However, their net buying in debt instruments suggests portfolio rebalancing rather than complete withdrawal.

 

Domestic Institutional Investors (DIIs) continued to invest steadily, supported by robust SIP inflows, long-term confidence in India’s growth story, and opportunities created by market corrections.

 

Macroeconomic Indicators

GDP Growth:

S&P Global Ratings has retained India’s GDP growth forecast for FY26 at 6.5%, citing robust domestic demand, rising investment, and ongoing tax reforms.

Inflation Outlook:

 

The RBI has revised its FY26 inflation forecast down to 3.1%, supported by favorable monsoons, easing food prices, and adequate food grain stocks.

Global Backdrop:

A slowing U.S. economy, potential Fed rate cuts, elevated crude oil prices, weak Chinese demand, and geopolitical tensions are influencing market sentiment. 

While domestic investors continue to offer stability, export-oriented and oil-dependent sectors face headwinds. The RBI remains cautious, balancing growth support with inflation and external risks.

 

Why Indian Equities Are Poised for a Strong Upcycle : 5 Key Drivers

1.      FII Holdings at Multi-Year Lows:

FIIs currently own about 17–20% of Indian equities, well below historical peaks of 23–25%. A rebound in FII flows could trigger valuation re-rating, particularly in large caps and financials.

2.      Time Correction Post-COVID Rally:

After a strong rally, markets have consolidated since mid-2023, allowing earnings to catch up with prices. Nifty’s forward P/E has moderated from ~24x to ~19–20x, closer to historical averages, setting the stage for the next leg of growth.

3.      Structural Reforms and Policy Tailwinds:

GST 2.0, PLI incentives, and massive infrastructure investments (₹11–13 lakh crore annually) are enhancing formalization, efficiency, and profitability across sectors. Manufacturing, capital goods, logistics, and consumption are key beneficiaries.

4.      Robust Corporate Earnings & Capex Cycle:

India Inc. is projected to deliver 12–15% annual EPS growth over the next three years, supported by expanding domestic demand, margin improvement, and new capacity creation — with growth increasingly driven by Tier-2 and Tier-3 cities.

5.      India as a Global Growth Outlier:

With GDP growth of 6.5–7%, India is set to remain the fastest-growing major economy, attracting sustained global capital flows and commanding a valuation premium.

 

  Investment Strategy – Our View

  Equity

•      Market Cap-to-GDP ratio: 137.5 → Overvaluation risk

•      Avoid lumpsum allocations. Invest gradually over 20–24 weeks via SIPs/STPs.

•      Preferred Themes:

o   Large Cap & Hybrid Funds → Stability, lower volatility

o      Banking & Financials, Business Cycle → Tactical, moderate risk exposure

•      Avoid fresh Small-Cap entry at current valuations unless and until 7+ years of holding

  Debt

•      Short Term (<1 year): Ultra-Short / Money Market Funds

•      Medium Term (~3 years): High-Quality Corporate Bonds, Banking & PSU Debt Funds •    Avoid Credit Risk Funds amid volatility.

 

If you have any questions or need portfolio advice, feel free to reach out to your advisor through 9940116967

S.Sridharan, Founder, https://www.walletwealth.co.in/ 

Team Wallet Wealth

SEBI Registered Investment Advisor – Research Arm

Wallet Wealth LLP, 2nd Floor, No.8A, 2nd Main Road, Nanganallur, Chennai – 600 061 Ph:  044-48612114

You can contact Mr.S.Sridharan for all types of investments including mutual fund investment, medical insurance, and life insurance.

Read articles written by Mr. S. Sridharan in Nanayam Vikatan, a leading personal financial management magazine.

https://www.vikatan.com/author/855-sridharan-s

 

Disclaimer:

The above information is confidential and intended solely for our clients. It is based on sources believed to be reliable, but no representation is made regarding its accuracy or completeness. All views are subject to change without notice and should not be construed as investment advice without professional consultation.