Markets opened cautiously and experienced a further decline during morning trade, with the Nifty 50 dropping 114.65 points or 0.46 per cent to 24,776.20, while the Sensex fell 357.26 points or 0.44 per cent to 80,802.42. This marked the sixth consecutive session of losses amid ongoing foreign institutional investor selling and apprehensions regarding new United States trade policies.
The primary concern impacting market sentiment was the Trump Administration’s announcement of 100 per cent tariffs on branded pharmaceutical imports, set to take effect on October 1. Ponmudi R, CEO of Enrich Money, stated, “This move poses a direct risk to over $3.6 billion worth of annual Indian pharma exports to the US, raising concerns for companies with significant US exposure.” Following this announcement, the pharmaceutical sector faced immediate pressure, with Sun Pharma leading the declines on Nifty 50, down 2.13 per cent to ₹1,592.80.
The tariff announcement coincided with significant increases in US H-1B visa fees, resulting in heavy selling in IT sector stocks. Wipro decreased by 1.66 per cent to ₹237.99, while Infosys fell 1.65 per cent to ₹1,460.30. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, observed, “Trump is now moving from country-specific tariffs to product-specific tariffs,” adding that “higher tariffs on trucks and upholstered furniture indicate that the Trump administration’s weaponization of tariffs may continue until US inflation rises.”
Foreign institutional investors (FIIs) maintained their selling streak for the fourth consecutive session, offloading equities worth ₹4,995 crore on September 25. In total, FIIs withdrew ₹24,454 crore for the month of September, although domestic institutional investors provided some support with net purchases of ₹5,103 crore. Ponmudi R noted, “DIIs have stepped in with nearly ₹50,000 crore of inflows—underscoring resilient domestic conviction even as global uncertainties mount.”
Concerns among investors were further heightened by the rupee’s decline to near record lows around ₹88.7 against the dollar and rising volatility, as indicated by a 3.5 per cent increase in India VIX. Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, pointed out, “Sentiments at Dalal Street remain fragile, pressured by three big negatives: Trump’s steep tariffs and H-1B visa fee hike, Powell’s stagflation fears, and the rupee’s tumble.”
Despite the overall negative market sentiment, auto stocks showed relative strength, with Larsen & Toubro leading Nifty gainers, rising 1.69 per cent to ₹3,706.00. Tata Motors and Hero MotoCorp also saw gains of 1.68 per cent and 1.21 per cent, respectively. Maruti Suzuki increased by 0.92 per cent to ₹16,418.00, while Eicher Motors rose 0.81 per cent to ₹7,042.50.
From a technical standpoint, the Nifty has breached the crucial 25,000 psychological level and is now trading within a descending channel. Ponmudi R warned that, “A breach below 24,750 on the Nifty could accelerate the decline toward the 24,600–24,500 zone.” Hariprasad K, a SEBI-registered Research Analyst at Livelong Wealth, added that “with RSI (14) at 46.20 and trending below its moving average, the index reflects a neutral-to-bearish bias.”
The Bank Nifty also faced selling pressure, trading below the 55,000 level with immediate support at 54,900. Amruta Shinde, Technical Analyst at Choice Equity Broking, indicated that “a sustained breakdown below this level may trigger further selling, with potential downside targets at 54,800 and 54,500.” IndusInd Bank fell 1.32 per cent to ₹730.95, mirroring the broader weakness in the banking sector.
Gold prices remained stable at $3,778, buoyed by safe-haven flows ahead of upcoming US inflation data and rising geopolitical tensions. Rahul Kalantri, VP of Commodities at Mehta Equities, noted that “gold retained safe-haven demand after President Trump announced new tariffs effective October 1.”
Market participants are closely monitoring the Reserve Bank of India’s policy outcome scheduled for October 1, as well as the impending Q2 earnings season. Dr. Vijayakumar suggested that investors should consider utilizing dips to accumulate high-quality stocks, particularly those driven by domestic consumption, while maintaining a selective approach amid ongoing volatility.
With broad-based weakness observed across various sectors such as auto, IT, pharma, and consumer durables, analysts caution maintaining a prudent stance with tight stop-losses due to anticipated high volatility.
