The Indian equity markets witnessed a sharp decline on Friday, September 26, 2025, as benchmark indices Sensex and Nifty slipped in early trade, dragged down by heavy selling in the pharmaceutical sector and continued foreign institutional investor (FII) outflows.
Adding to the bearish mood were concerns surrounding the U.S. H-1B visa fee hike, a 100% tariff on U.S. pharmaceutical imports, and weak global market trends. Together, these factors fueled uncertainty and risk aversion, with investors preferring to book profits rather than increase exposure.
Sensex and Nifty: Early Trade Highlights
- The 30-share BSE Sensex fell 329.66 points to 80,830.02.
- The 50-share NSE Nifty declined 105.7 points to 24,785.15.
The decline followed Thursday’s session (September 25, 2025), when the Sensex had already slipped 555.95 points (0.68%) to settle at 81,159.68, while the Nifty lost 166.05 points (0.66%) to end at 24,890.85.
Friday’s early drop reinforced the view that Indian equities are facing persistent selling pressure, both from domestic and international triggers.
Pharma Sector Under Pressure
The biggest drag came from the pharma sector, particularly heavyweight Sun Pharma, which tumbled more than 3% in early trade.
The fall was directly linked to the Trump Administration’s decision to impose a 100% tariff on all imports of branded and patented pharmaceutical products from October 1.
Why This Matters for Indian Pharma:
- Export Dependency – The U.S. is one of the largest markets for Indian pharmaceutical companies. Any tariff barrier directly impacts revenue streams.
- Cost Competitiveness – Indian firms rely on affordable pricing as their USP. A 100% tariff erodes that advantage, making them less competitive.
- Investor Sentiment – Pharma has long been considered a defensive sector in Indian markets. Tariff concerns weaken that perception.
As Ponmudi R, CEO of Enrich Money, explained:
“Investor attention will squarely be on the domestic pharma sector after the Trump Administration announced a 100 per cent tariff on imports of branded or patented pharmaceutical products effective October 1. This tariff action comes close on the heels of the steep hike in US H-1B visa fees, which has already triggered heavy selling in IT sector stocks over the past few sessions.”
IT Sector Continues to Face Heat from H-1B Visa Fee Hike
Even before the pharma shock, Indian IT companies were reeling under the U.S. H-1B visa fee hike.
Firms like Infosys, HCL Tech, and Tech Mahindra saw losses, extending their recent declines. The U.S. is the largest market for Indian IT services, and higher visa costs significantly raise the cost of deploying talent onsite.
Investors fear that profit margins will be hit, leading to lower earnings guidance in upcoming quarters. This explains the sector-wide selling pressure despite robust demand for digital transformation services globally.
Other Market Movers
Besides pharma and IT, several other stocks influenced Friday’s market sentiment:
- Lagging Stocks:
- Sun Pharma (−3%+)
- Tech Mahindra, Infosys, HCL Tech (IT sector drag)
- Asian Paints (weak consumer demand outlook)
- Power Grid, Tata Steel (pressure from global commodity trends)
- Gainers:
- Larsen & Toubro (L&T) (robust infrastructure order book)
- Tata Motors (resilient auto demand)
- ITC and Trent (consumer defensive plays attracting buyers)
This mixed performance shows that while pockets of strength remain, broader market sentiment is being weighed down by macroeconomic uncertainties.
Global Cues: Asian and U.S. Markets Weak
Indian markets mirrored trends across Asia, where major indices were under pressure:
- South Korea’s Kospi traded lower.
- Japan’s Nikkei 225 slipped.
- Shanghai SSE Composite Index declined.
- Hong Kong’s Hang Seng continued its bearish run.
On Wall Street, U.S. markets closed in the red on Thursday, reflecting investor caution over interest rate uncertainties, global trade tensions, and policy moves.
Foreign Institutional Investor (FII) Selling
Perhaps the most significant factor weighing on Indian equities has been sustained FII outflows.
- On Thursday (September 25, 2025), FIIs offloaded equities worth ₹4,995.42 crore, according to exchange data.
- Continuous selling by FIIs has created pressure on liquidity and market breadth.
As V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, put it:
“The sustained FII selling may keep the market under pressure.”
Oil Prices Add to Investor Concerns
The global oil benchmark Brent crude edged up 0.17% to $69.54 per barrel.
While the rise is modest, oil price movements remain critical for India, a major importer of crude. Higher oil prices can stoke inflationary pressures, impact fiscal balances, and weigh on corporate margins.
Macro Headwinds Facing Indian Equities
Friday’s sell-off reflects the convergence of multiple global and domestic headwinds:
- U.S. Policy Moves – H-1B visa hikes and pharma tariffs directly impact Indian IT and pharma exports.
- FII Outflows – Persistent selling by foreign investors creates volatility and weakens market sentiment.
- Global Growth Concerns – Weakness across Asian and U.S. indices signals caution on global demand recovery.
- Commodity Trends – Fluctuating crude oil prices keep inflation and fiscal concerns alive.
- Valuation Worries – After months of strong rallies, some analysts believe Indian equities were overvalued, prompting profit booking.
Sectoral Impact Analysis
Pharma
- Immediate negative sentiment due to U.S. tariffs.
- Export-driven revenue models under threat.
- Long-term impact depends on negotiations and diversification.
IT
- H-1B fee hikes increase operational costs.
- Potential margin compression in coming quarters.
- Long-term outlook strong, but near-term volatility persists.
Infrastructure & Autos
- L&T and Tata Motors show resilience.
- Domestic demand and government infrastructure push act as buffers.
FMCG & Consumer Stocks
- ITC and Trent attract defensive buying.
- Investors shift capital into stable, dividend-yielding counters.
Investor Outlook: What’s Next for the Markets?
Market experts believe volatility may persist in the short term due to global uncertainties and sustained FII selling.
- Short-Term Outlook – Pressure likely on IT and pharma. Defensive stocks and domestic-focused sectors may outperform.
- Medium-Term Outlook – Investors may await clarity on U.S. policy moves, global growth indicators, and domestic earnings reports.
- Long-Term Outlook – India’s structural growth story remains intact, but global headwinds will continue to test resilience.
What Should Retail Investors Do?
For retail investors, navigating the current volatility requires patience and strategy:
- Avoid Panic Selling – Markets often overreact to policy announcements.
- Diversify Portfolios – Spread exposure across sectors and asset classes.
- Focus on Quality Stocks – Stick to fundamentally strong companies with resilient business models.
- Consider SIPs – Systematic Investment Plans in mutual funds can help ride out volatility.
- Stay Updated – Policy moves in the U.S. and global market cues are critical to monitor.
Conclusion
The decline in Sensex and Nifty on September 26, 2025, underscores how vulnerable Indian equities remain to global shocks and policy uncertainties. With pharma stocks hit by U.S. tariffs, IT under pressure from H-1B fee hikes, and FIIs exiting in large volumes, the markets are navigating a turbulent phase.
While short-term volatility is likely to persist, India’s long-term growth potential and domestic demand resilience continue to offer hope for investors. For now, however, the focus remains on managing risks, watching global cues, and adapting strategies in an uncertain environment.