Indian Markets Tumble for Sixth Straight Day as US Tariffs Spark Sell-Off
Mumbai, India – September 26, 2025 – Indian benchmark indices, the Sensex and Nifty, concluded their sixth consecutive session in the red today, marking the steepest weekly decline in nearly seven months. The Sensex plunged by 733.22 points, or 0.90%, to settle at 80,426.46, while the Nifty50 breached the crucial 24,700 mark, shedding 236.15 points, or 0.95%, to close at 24,654.70. This widespread market downturn erased approximately ₹6.73 lakh crore of investor wealth on the BSE.
The significant market correction was primarily triggered by an unexpected announcement from US President Donald Trump, detailing a 100% tariff on imports of branded and patented pharmaceutical products, effective October 1, 2025. This move sent shockwaves through the Indian pharmaceutical sector, which heavily relies on the US market for over a third of its exports. The broader market sentiment was further dampened by additional tariffs on heavy trucks and kitchen cabinets, alongside persistent concerns over increased H-1B visa fees, impacting the IT sector.
Market Plunge: A Deep Dive into the Day's Events
The market's precipitous fall today was a culmination of several factors, but the immediate catalyst was undeniably the fresh wave of US tariffs. President Trump's declaration not only targeted the lucrative pharmaceutical sector but also extended to other goods, signaling a broader protectionist stance that rattled global trade nerves. The Nifty Pharma index bore the brunt of this news, declining by 2.14%, while the Nifty IT index, already under pressure from H-1B visa concerns, recorded its worst performance in seven months, dropping 2.45%.
Throughout the day, selling pressure intensified across all sectors. All 16 major sectoral indices ended in negative territory, highlighting the pervasive bearish sentiment. The intraday lows saw the Sensex touch 80,332.41 and the Nifty dip to 24,629, indicating a broad-based capitulation by investors. Beyond the direct impact of tariffs, persistent selling by Foreign Portfolio Investors (FPIs) continued to weigh heavily on the market. FPIs have offloaded stocks worth ₹13,450 crore in September alone, contributing to a staggering ₹1,44,085 crore sell-off year-to-date in 2025.
Adding to the domestic woes, global market declines, a weakening Indian Rupee against the US Dollar, and a rising appeal for safe-haven assets like bullion further fueled the sell-off. The confluence of these international and domestic factors created a perfect storm, leading to the sixth consecutive day of losses and a significant erosion of investor confidence. Key players in this unfolding drama include the US administration, whose policy decisions are directly impacting Indian export-oriented sectors, and foreign institutional investors, whose sustained outflows are draining liquidity from the Indian equity markets.
Companies Under Pressure: M&M and Eternal Lead the Decline
Today's market rout saw several prominent companies experience significant declines, with Mahindra & Mahindra (NSE: M&M) and Eternal (NSE: ETERNAL) among the top losers. Mahindra & Mahindra's shares dropped by approximately 3.68% to 3.79%, closing around ₹3396.50 to ₹3400.00. While M&M is primarily an automotive and farm equipment conglomerate, the broader market sentiment and potential ripple effects of trade tensions on manufacturing and consumer demand likely contributed to its fall. A general risk-off environment often sees investors pulling out of cyclicals like auto stocks.
Eternal also faced a substantial downturn, with its share price falling by 3.2% to an intraday low of ₹321.4. Reports indicated a fall ranging from 2.81% to 2.99%. This decline marks Eternal's fourth consecutive day of losses, accumulating a total drop of 5.81% over this period. While the specific business focus of Eternal isn't detailed, its inclusion among the top losers suggests either direct exposure to the tariff-hit sectors or a vulnerability to broader market corrections and investor apprehension.
Companies with significant exposure to the US pharmaceutical market, such as major Indian drug manufacturers, are undoubtedly the biggest potential losers from the new US tariffs. Similarly, IT companies with substantial US revenue streams face headwinds from both the H-1B visa fee hike concerns and a generally cautious sentiment towards US-dependent sectors. Conversely, companies with strong domestic demand, limited export exposure to the US, or those operating in defensive sectors might be relatively insulated or even emerge as 'winners' if investors rotate towards safer domestic plays, although today's broad-based sell-off indicates few safe havens.
Wider Significance: Trade Wars, FPI Exodus, and Global Jitters
This current market downturn is not an isolated event but rather a stark reflection of broader industry trends and geopolitical tensions. The US decision to impose tariffs on Indian pharmaceutical products underscores a growing global trend towards protectionism and trade wars, which could have far-reaching implications for economies heavily reliant on exports. India's pharmaceutical sector, a global powerhouse, now faces a significant hurdle in one of its most critical markets, potentially forcing a re-evaluation of supply chains and market diversification strategies.
The persistent selling by Foreign Portfolio Investors (FPIs) is another critical aspect. Their continuous outflow from Indian equities reflects a broader shift in global capital flows, possibly driven by rising interest rates in developed economies, a stronger dollar, and increased risk aversion towards emerging markets. This FPI exodus exacerbates domestic market volatility and puts pressure on the Indian Rupee, creating a challenging environment for policymakers and businesses alike. The ripple effects could extend to other emerging markets, as investors become more cautious about allocating capital to regions perceived as vulnerable to trade disputes or capital flight.
Historically, periods of heightened trade tensions and FPI outflows have often led to prolonged market corrections in India. Comparisons can be drawn to previous instances of global economic uncertainty or specific policy changes affecting key sectors. Regulatory bodies in India will likely be closely monitoring the situation, as sustained market volatility could prompt interventions or policy adjustments to stabilize investor sentiment and support economic growth. The current scenario highlights the interconnectedness of global financial markets and the significant impact that international policy decisions can have on domestic economies.
What Comes Next: Navigating Uncertainty
In the short term, the Indian market is likely to remain volatile, with investor sentiment heavily influenced by further developments in US trade policy and global economic cues. The immediate focus will be on the actual implementation of the US tariffs on October 1st and any potential retaliatory measures or diplomatic resolutions. Companies in the pharmaceutical and IT sectors will need to rapidly assess the impact on their earnings and potentially revise their guidance, leading to further stock price adjustments. We could see a flight to quality, with investors favoring large-cap, financially sound domestic-oriented companies over export-dependent or mid-cap/small-cap firms.
Long-term possibilities include a strategic pivot by Indian companies towards diversifying their export markets away from the US, or an increased focus on the vast domestic market. For the pharmaceutical sector, this might involve accelerating efforts in other regulated markets or increasing investment in domestic R&D to cater to local demand. The government might also explore new trade agreements or strengthen existing ones with other nations to mitigate the impact of US protectionism. Potential strategic adaptations include supply chain restructuring, cost optimization, and enhanced lobbying efforts.
Market opportunities could emerge in sectors less exposed to international trade tensions, such as domestic consumption-driven industries, infrastructure, or certain segments of the financial sector. Challenges will include navigating a potentially weaker rupee, higher import costs, and reduced foreign investment. Potential scenarios range from a quick de-escalation of trade tensions, leading to a market rebound, to a prolonged period of trade disputes, necessitating a fundamental re-calibration of India's economic strategy and corporate business models.
Wrap-Up: A Test of Resilience for Indian Markets
Today's sharp decline in the Sensex and Nifty, marking a sixth consecutive session of losses, serves as a critical reminder of the Indian market's vulnerability to global geopolitical shifts and trade dynamics. The US tariff announcement on pharmaceuticals, coupled with persistent FPI selling, has created a challenging environment, eroding significant investor wealth and highlighting the urgent need for strategic adaptation by export-oriented sectors. The key takeaway is the heightened risk associated with global trade uncertainty and the immediate impact it can have on market sentiment and corporate valuations.
Moving forward, the market will be keenly watching for any signs of de-escalation in trade tensions, policy responses from the Indian government, and the resilience of corporate earnings in the face of these headwinds. Investors should brace for continued volatility and consider reviewing their portfolios for exposure to sectors most affected by these developments. The current situation is a test of resilience for Indian markets and companies, pushing them to innovate and diversify.
What investors should watch for in the coming months includes the trajectory of US-India trade relations, the extent of FPI outflows, the performance of the rupee, and the quarterly results of pharmaceutical and IT companies. These factors will provide crucial insights into the market's ability to absorb shocks and its potential direction. This content is intended for informational purposes only and is not financial advice
