Sensex declines 700 pts, Nifty near 24,650: US tariffs on pharma, IT sell-off among key factors behind market fall

Sensex declines 400 pts, Nifty below 24,800: US tariffs on pharma among key factors behind market fall

Benchmark indices Sensex and Nifty closed in red for sixth straight day on September 26 as they hit three-week lows amid broad-based selling. Sensex closed 733.22 points or 0.9% at 80,426.46, and the Nifty ended 236.15 points or 0.95% lower at 24,654.70. About 957 shares advanced, 2,976 shares declined, and 144 shares were unchanged.

The benchmarks posted their worst weekly fall in six months. Barring seven companies, all other Nifty 50 constituents closed in the red. Gains in some automobile stocks such as Maruti Suzuki, Eicher Motors, and Tata Motors limited further loss in the Nifty 50. Mid and smallcap indices fell 2% each.

Here are the various factors behind market fall:

1) US tariffs on pharma 

Pharmaceutical shares faced losses after US President Donald Trump announced a 100% levy on branded and patented drugs.

The Nifty pharma index slipped 2.1%, with all its 20 constituents down. The sectoral index fell for fifth consecutive session and has hit over one-month low of 21445.50 points.

Heavyweight Sun Pharmaceutical Industries stock fell 3.4%. Large-caps such as Dr. Reddy's Laboratories and Cipla fell over 2-3%. Shares of other pharma players such as Natco Pharma, Laurus Labs, and Biocon were down 3-5%.

Trump unleashed a fresh round of punishing tariffs on a broad range of imported goods, including branded and patented drugs, and heavy-duty trucks, effective October 1.

The US accounts for slightly more than a third of India's pharmaceutical exports, which comprise mainly cheaper generic versions of popular drugs. Exports to the country rose 20% to about $10.5 billion in fiscal 2025.

The near term impact of the tariffs is likely to be limited, as India mainly exports generics, ICICI Securities research analyst Pankaj Pandey said in a note.

"That being said, uncertainty still remains whether complex generics and biosimilars will come under tariff embargo in the future," Pandey added.

2) Accenture results impact on IT

Indian IT stocks fell for the sixth straight sessions after Accenture's quarterly results signaled 'patchy' demand recovery.

On September 26, Nifty IT index was down 2.4%, with all 10 stocks on the index trading in the red.

US tech company Accenture beat fourth-quarter revenue estimates, but analysts said discretionary demand remains unchanged.

Analysts at Macquarie said the common takeaway is that "demand recovery is patchy as of now".

The muted growth guidance poses downside risks to consensus expectations of acceleration in growth in FY27 for Indian IT firms, Jefferies said.

Goldman Sachs said FY26 revenue growth expectations remain unchanged, adding that FY27 revenue growth estimate for Indian IT firms could be at risk if discretionary demand shows no signs of improvement this year.

LTIMindtree, Wipro, and Tech Mahindra fell 2% each. Tata Consultancy Services posted its biggest weekly fall in 5 years.

Nifty IT index fell 21% so far in 2025 as against a 5% rise in Nifty 50 index during the same period.

Accenture reported revenue growth of 1.5% during the fiscal fourth quarter, beating consensus estimates and nearing the top end of its guidance.

Shares of Accenture dropped more than 2.5% despite the consulting firm reporting revenue above expectations.

Investor sentiment weakened this week after the US announced a $100,000 fee for fresh H-1B visa applications earlier this month, raising concerns about higher costs for Indian IT firms which draw a large share of their revenue from the country.

The Wall Street Journal reported on Thursday that U.S. lawmakers are scrutinising the H‑1B visa usage of big tech firms, including Amazon and Apple.

"Markets run on hope, but any rebound hinges on U.S. trade talks while visa issues have also weighed on sentiment," said Arun Kejriwal, founder of Kejriwal Research and Investment Services.

"With little progress and mostly bravado from the U.S. President, doubts persist that macro moves like GST cuts will deliver the big push that the markets have been waiting for."

3) Weak global cues

Asian stock markets declined on Friday, particularly affecting pharmaceutical companies, after President Trump introduced a new wave of steep tariffs. Additionally, stronger-than-expected U.S. economic data caused traders to reduce expectations for aggressive interest rate cuts by the Federal Reserve.

Trump revealed that the U.S. would implement 100% tariffs on imported brand-name pharmaceuticals, 25% on heavy-duty trucks, and 50% on kitchen cabinets. He also announced a 50% tariff on bathroom vanities and a 30% tariff on upholstered furniture, all set to begin on October 1.

In response, shares of pharmaceutical firms in Asia fell sharply. Japan’s Topix pharmaceutical index dropped 1%, and Hong Kong’s innovative drug index declined by 2.8%. Chinese furniture stocks also weakened, with a related index falling 1.1%.

Overall market sentiment was negative. The Nikkei dropped 0.13%, the Hang Seng Index fell 0.9%, China’s CSI300 edged down 0.3%, and MSCI’s Asia-Pacific index (excluding Japan) slid over 1%.

U.S. markets also closed lower on Thursday, September 25, as upbeat economic indicators raised doubts about further interest rate cuts by the Federal Reserve. Weekly jobless claims fell by 14,000 to a seasonally adjusted 218,000, while revised GDP figures showed stronger second-quarter growth driven by solid consumer spending and business investments.

Chicago Fed President Austan Goolsbee expressed caution about reducing rates too quickly, citing inflation risks. His remarks followed the Fed's recent 25 basis point rate cut—its first since December—which was prompted by labor market concerns. Despite the Fed signaling the potential for more cuts, market odds of another rate cut in October dropped to 83.4% from 92% the previous day, according to the CME FedWatch Tool.

On Wall Street, the S&P 500 fell by 33.25 points (0.50%) to 6,604.72, while the Nasdaq declined by 113.16 points (0.50%) to 22,384.70. The Dow Jones Industrial Average lost 173.96 points (0.38%) to close at 45,947.32. Most sectors in the S&P 500 finished lower.

4) India VIX rises 7.7%

India VIX, the volatility gauge, rose 7.7% on September 26, its highest level since September 1. A higher VIX level usually suggests that uncertainty will remain high in the near term

With inputs from Reuters