Sensex ends 850 pts lower, Nifty concedes 24,750 as bank, pharma stocks weight on sentiment

Nifty Bank index remains below all key moving averages except the 200-day moving average, highlighting that recovery attempts are being capped at higher levels.

Benchmark indices Nifty and Sensex ended the session on a weak footing on Tuesday, August 26, after a sharp selloff in bank, pharma, and metal stocks helped bears ruled the Street today. The drop comes after a draft notice revealed US President Donald Trump’s plan to slap 50 percent tariffs on Indian goods.

Markets will remain shut on August 27 on account of Ganesh Chaturthi.

At close, the Sensex was down 849.37 points or 1.04 percent at 80,786.54, and the Nifty was down 255.70 points or 1.02 percent at 24,712.05. About 1167 shares advanced, 2751 shares declined, and 125 shares unchanged.

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Sectoral indices were largely in the red with Realty, PSU Bank, Pharma, and Smallcap stocks bearing the heaviest losses. Midcaps and Energy also slipped over a percent each, while Metals, Infra, Oil & Gas, and Private Banks declined in tandem. Among gainers, FMCG stood out with gains of over 1 percent, while Auto succumbed to selling pressure and ended in the red. Volatility edged higher, with India VIX rising more than 3 percent.

Among individual stocks, India's leading auto major, Maruti Suzuki, closed 2 percent higher after Prime Minister Narendra Modi inaugurated the first of the two major projects at the Suzuki Motor Plant in Hansalpur, Gujarat. This includes the flag off of the first unit of the Maruti Suzuki e-Vitara to be rolled off the production line. It will be followed by the inauguration of the first plant to produce hybrid battery electrodes.

The shares of pharma companies dropped in trade on August 26 after US President Donald Trump said that he would reduce drug prices in the US by a whopping "1,400-1,500 percent". He also reiterated his threat to slap higher tariffs on pharma imports. The index has now snapped a three-session gaining streak. Trump had earlier sent letters to major drug makers, demanding they lower drug prices in the US and bring them in line with what other nations are paying for new medicines.

Shares of Vodafone Idea Ltd., declined as much as 9 percent on August 26, after having gained as much as 20 percent in the last six trading sessions, of which they gained in five. The fall came after Minister of State for Communications Chandra S Pemmasani ruled out any further relief to the debt-laden telecom operator.

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India's largest drugmaker Sun Pharma fell as much as 3.5 percent on August 26, after the stock was downgraded by brokerage firm BofA Securities. BofA Securities downgraded Sun Pharma to "underperform" from its earlier rating of "neutral" and cut its price target by 9 percent to Rs 1,570 from Rs 1,730 earlier.

Unless the index decisively clears 25,150, upward momentum is likely to remain capped. On the downside, sustaining above 24,800 is critical to prevent deeper corrections. For now, a “sell on rise” approach appears prudent, with traders awaiting a clear breakout above 25,100 or a breakdown below 24,800 for the next directional move. Ahead of the key tariff announcement on the 27th, the market is likely to witness sideways-to-volatile sessions.

"On the daily chart, the Nifty Bank index remains below all key moving averages except the 200-day moving average, highlighting that recovery attempts are being capped at higher levels. The index continues to hover close to the recent swing low of 54,905, which is acting as immediate support. A breakdown below this zone could drag the index further toward 54,600, which coincides with the 127.8 percent Fibonacci extension," Om Mehra of SAMCO Securities said.

"The broader trend remains fragile as long as the index stays below its short-term averages. Support is placed at 54,900, followed by 54,600, while resistance stays firm at 55,500–55,600. Until the index crosses above these hurdles, short-term moves may remain choppy with risks tilted toward the downside," he added.

Eicher Motors, HUL, Maruti Suzuki, ITC, Nestle India, and TCS were the top gainers on the Nifty. Laggards on the index included Shriram Finance, Sun Pharma, Tata Steel, Bajaj Finance, and Trent.