Defense stocks stole the show, with Nifty India Defense gaining 1.48%. Healthcare followed suit at 1.24%, alongside advances in pharma (1.08%), PSU banks (0.95%), oil & gas (0.87%), auto (0.80%), manufacturing (0.78%), metals (0.39%), and infra (0.32%).

Weak spots emerged in media (-0.68%), FMCG (-0.16%), financial services (-0.11%), and services (-0.06%).

Broader markets showed divergence: Nifty Midcap 100 surged 0.66% to 59,798.15, but Nifty Smallcap 100 was nearly unchanged at 17,117.65.

Sensex top performers were BEL, Adani Ports, Sun Pharma, Maruti Suzuki, Bharti Airtel, SBI, TCS, Tata Steel, ICICI Bank, HUL, Titan, and Tech Mahindra. Draggers included Trent, Eternal, Powergrid, HDFC Bank, Asian Paints, UltraTech Cement, NTPC, Bajaj Finance, Axis Bank, ITC, Bajaj Finserv, T&T, HCL Tech, and M&M.

According to Sudeep Shah of SBI Securities, the Nifty’s tight range-bound trading near lows signals wary investors. Resistance looms at 25,630-25,660, with a break potentially targeting 25,800. Key support is at 25,380-25,350.

As traders eye policy announcements and international developments, the defense sector’s outperformance highlights its role as a market stabilizer in uncertain times.

Leading the decline were metal shares, which dragged Nifty Metal down 3.31% and Nifty Commodities 2.24%. Realty (down 2.23%), energy (2.04%), FMCG (1.90%), oil & gas (1.88%), PSE (1.68%), and consumption (1.63%) sectors also posted hefty losses. In the Sensex pack, blue-chip names including HUL, Eternal, Tata Steel, Titan, TCS, Power Grid, BEL, Asian Paints, M&M, HDFC Bank, HCL Tech, NTPC, Infosys, ITC, Kotak Mahindra Bank, ICICI Bank, and Indigo were among the notable decliners. Bajaj Finance and SBI stood out as rare gainers.

Midcap and smallcap indices fared no better, with Nifty Midcap 100 slumping 1.71% to 59,438 and Nifty Smallcap 100 dropping 1.79% to 17,032.90. The session began on a weak note influenced by overnight losses in the US, and momentum deteriorated through the day.

Rupak De of LKP Securities analyzed, ‘Nifty opened lower following soft US cues and ended with a big cut. India VIX has crossed above 200 DMA, indicating heightened anxiety.’ He outlined key levels: support at 25,500, potential slide to 25,000 on breach, and resistance at 25,800.

Meanwhile, oil markets added pressure, with Brent crude gaining 0.55% to $68/oz and WTI up 0.5% to $63/oz. As markets digest this setback, focus shifts to upcoming economic data and global trade developments. This sharp correction serves as a reminder of the interconnected risks in today’s financial landscape.

The pressure was most evident in realty and public sector banking spaces. Nifty Realty nosedived 3.34%, with PSU Bank index down 2.27%, Energy 1.92%, Defence 1.80%, Infrastructure 1.69%, PSE 1.54%, and Commodities 1.38%. This sectoral rout ensured almost all prominent indices ended in the red.

Sensex gainers included Tech Mahindra, HUL, Infosys, Asian Paints, TCS, Titan, and UltraTech Cement, providing some respite. Losers dominated, however, with IndiGo, Axis Bank, Bajaj Finserv, Power Grid, BEL, SBI, Maruti Suzuki, NTPC, Bajaj Finance, Trent, L&T, Kotak Mahindra Bank, Bharti Airtel, and M&M among the biggest drags.

Midcap and smallcap segments mirrored the largecap weakness. Nifty Midcap 100 slid 1.80% or 1,045.65 points to 57,145.65, while Nifty Smallcap 100 fell 1.95% or 324.50 points to 16,352.75.

Analysts pointed to a weakening rupee at record lows versus the USD and continuous FII selling as primary culprits, overriding upbeat global markets and robust PMI figures. Negative sentiment persists among investors.

Future trajectories hinge on Fed rate cuts and the Union Budget. Markets opened higher, buoyed by international positivity—Sensex at 82,335 (up 28 points) and Nifty at 25,344 (up 55)—but couldn’t sustain the early gains.

Financial heavyweights bore the brunt of selling pressure. HDFC Bank dropped 1.2% and Kotak Mahindra Bank fell 1.1%, pulling the banking sector down 0.9%. Auto stocks also weakened with Maruti Suzuki and Tata Motors declining over 1% each amid softening demand signals.

In contrast, the midcap space buzzed with activity. Trent jumped 3.2% on robust retail sales data, while IREDA rallied 4% riding green energy tailwinds. The BSE Midcap index rose 0.8%, significantly outpacing the Sensex. Smallcap bulls charged ahead too, pushing their index up 1%.

‘This rotation into midcaps reflects value hunting after recent corrections, but sustainability depends on earnings delivery,’ noted Deepak Shenoy, Founder of Capital Mind. Trading volumes stayed moderate at ₹12 lakh crore, with FIIs net sellers to the tune of ₹1,200 crore while DIIs absorbed the supply.

Global markets offered little direction with US futures flat ahead of Fed meet. Domestically, eyes are on upcoming RBI commentary and inflation data. The market’s resilience amid geopolitical noise underscores underlying domestic strength, though experts caution against overexposure to high-beta midcaps.

The report highlights that the festive season began on September 22nd, after which the market experienced an upswing compared to the slower sales in August. Wholesale sales for some auto companies (OEMs) were limited due to delayed purchases by dealers and logistical challenges. Tractor sales remained exceptionally strong. Considering the full-month impact of the GST cuts and positive market sentiment, an even more impressive performance is anticipated in October.

**Strong Recovery by Auto Companies**

Bajaj Auto witnessed a 5% year-on-year (YoY) increase in domestic two-wheeler sales and a 48% month-on-month (MoM) surge. Exports grew by 12%, while commercial vehicle sales declined by 1%. However, exports increased by 67%. TVS Motor’s total two-wheeler sales rose by 11%, with a 12% increase in domestic sales and an 8% rise in electric vehicles (EVs). Hero MotoCorp’s domestic sales grew by 5%, and total sales increased by 8%. The company’s exports saw a remarkable 95% growth.

**Strong Performance in Passenger Vehicle Sales**

Maruti Suzuki experienced robust retail sales. The company delivered nearly 2 lakh vehicles and had 2.5 lakh bookings pending. However, wholesale sales decreased by 8% due to logistical issues. Domestic sales, in conjunction with Toyota, decreased by 6%, but exports increased by 52%, resulting in an overall sales increase of 3%. Hyundai’s domestic sales increased by 1%, while exports surged by 44%. Mahindra & Mahindra’s SUV sales increased by 10% and tractor sales by a substantial 50%, supported by festive demand. Tata Motors recorded a 45% growth in domestic passenger vehicle sales. Commercial vehicle sales remained stable, while small commercial vehicles and pickup sales increased by 30%.

The Honda Shine 125 is powered by a 123.9cc single-cylinder, air-cooled engine that delivers 10.63 hp and 11 Nm of torque, coupled with a 5-speed gearbox.

In the scooter segment, the Jupiter is now available at Rs 72,400, down from Rs 78,881, while the Jupiter 125 is priced at Rs 75,600, compared to its previous price of Rs 82,395. The Ntorq series’ 125 cc variant is priced at Rs 80,900, and the 150 cc version at Rs 1,09,400.

High-volume commuter bikes such as the Radeon and Sport are now priced at Rs 55,100, reduced from Rs 59,950. The Raider is now available at Rs 80,500, down from Rs 87,625.

TVS aims to maintain its competitive edge by strategically adjusting prices. These price reductions across various models allow a broader range of customers to benefit. It is advisable for potential buyers to contact their local dealers to confirm prices, as RTO road tax prices vary by location.

Tier-2 Cities Emerge as EV Hubs

According to reports, Nalini Kanta Gollagunta, CEO of Mahindra’s automotive sector, highlights that cities like Bhubaneswar, Indore, Jaipur, and Meerut are emerging as new centers of EV demand. Smaller cities offer the advantage of readily available dedicated parking, simplifying the setup of home charging stations. Moreover, the increasing prevalence of short-distance daily commutes and improvements in highway infrastructure are accelerating EV adoption. Many customers in these areas fall within the price bracket exceeding 20 lakh rupees, making the transition to electric cars feasible without significant obstacles.

Mahindra’s Three-Tier Strategy

For Mahindra, this shift reinforces its EV strategy. The company secured a 41% revenue market share in the EV segment during Q1. This success is built upon its three-tier product approach.

Pack 3: Premium segment (e.g., BE 6 and XEV 9e), launched to strengthen the company’s EV identity.
Pack 2: Mid-range EVs, expanding the customer base and increasing sales from 3,500 to 4,000 units per month.
Pack 1: Entry-level EVs, tailored for first-time EV buyers.

The Premium Formula

Mahindra has focused on positioning EVs as premium products rather than merely affordable options. Pack 3 models have successfully presented EVs as desirable products to customers. Now, Pack 2 maintains a premium touch while remaining affordable, particularly for Tier-2 cities where enthusiasm for EV adoption is growing. Pack 1 is expected to attract a broader customer base in the future.

This formula is also evident in its SUV lineup. While the Scorpio is a volume driver, the XUV700 and Thar have resonated with younger demographics. The 3XO surpassed the 1 lakh unit mark within a year of its launch, demonstrating a balance between premium and mass-market appeal.

Challenges Remain

Although opportunities are substantial, challenges persist. Reduced GST on larger ICE SUVs could narrow the price gap between EVs and ICE vehicles. However, Mahindra believes that with the inclusion of features and tax benefits, EVs are already priced comparably to ICE vehicles in 60% of the market.

Auto Sector’s New Growth Outlook

* In anticipation of rising demand, Motilal Oswal has also increased its volume growth estimates.
* Two-wheeler sales are now expected to grow by 4% in FY26 and 7.5% in FY27, compared to the previous estimates of 1% and 5.7%, respectively.
* Sales of passenger vehicles may increase by 3% in FY26 and 8% in FY27, up from the previous estimates of 2% and 4%.
* Commercial vehicle sales are projected to grow by 5% in FY26 and 7% in FY27.
* Tractor sales are likely to increase by 10% in FY26 and 6% in FY27.

Shift Towards Premium Models

The report indicates that customers are increasingly favoring premium vehicles. This means that people are preferring cars with advanced features and greater comfort over smaller or budget-segment cars. However, demand for smaller cars may also gradually increase, as they are recovering from a low base.

Why Discounts Will Decrease With Rising Demand?

According to the new Motilal Oswal report, there is already an improvement in the demand for cars and two-wheelers. Companies are considering reducing discounts to improve their profits. The report clearly states that as demand increases, discounts will decrease, which will positively affect the margins of automakers.

GST Cut: A Major Game Changer

The real relief for the auto sector comes from the recent decision of the GST Council. The tax on most auto segments has been reduced from 28 percent to 18 percent. The tax on SUVs (longer than 4 meters) has now been set at 40 percent, down from 43.50 percent. This tax cut came into effect on September 22, 2025, and is directly benefiting consumers.

Significant Price Drops

Tata Motors and Mahindra cars are now cheaper by up to ₹1.5 lakh. Moreover, the price of the Toyota Fortuner has decreased by up to ₹3.49 lakh. Maruti vehicles have also become cheaper by up to ₹1.2 lakh.

What Does This Mean for Customers?

It is clear that with vehicle prices already so low, companies will avoid offering additional discounts during the festive season. So, if you are waiting for festive offers, you may not get any special benefits.