Why Did Nifty and Sensex Plummet This Week?
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Synopsis
Mumbai's financial markets faced a significant downturn this week, with both Nifty and Sensex hitting their lowest points in six months due to rising concerns over H-1B visa fees and new US pharma tariffs. As investors brace for upcoming economic indicators, the stability of market valuations hangs in the balance.
Key Takeaways
- Nifty and Sensex saw their steepest weekly decline in six months.
- Concerns over H-1B visa fees and US tariffs impacted investor sentiment.
- Midcap and small-cap indices fell more sharply.
- The Nifty index fell below its 20-week EMA.
- Market valuations depend on corporate earnings recovery.
Mumbai, Sep 27 (NationPress) This week saw the Indian equity benchmarks experience their most significant decline in six months, marking a sixth consecutive session of downturns, driven by worries regarding the H-1B visa fee increase and US pharmaceutical tariffs.
The Nifty and Sensex dropped approximately 2.50 percent and 2.54 percent, respectively, as the IT and pharmaceutical sectors faced heightened selling pressure.
Midcap and small-cap indices encountered even more intense selling, plummeting 4.38 percent and 4.27 percent for the week due to inflated valuations.
Early in the week, the IT index faced pressure from fears over rising H-1B visa expenses. On Friday, shares of Indian pharmaceutical firms declined after US President Donald Trump unveiled tariffs of up to 100 percent on imports of branded and patented pharmaceutical products, effective from October 1.
Consequently, the Nifty index reversed the gains from the past two weeks, falling below its 20-week EMA, indicating a potential weakening trend in the short term.
By Friday, the Nifty had lost 236.15 points, closing at 24,654.70, barely staying above its immediate support zone of 24,500–24,550.
Analysts expect sellers to dominate unless the index surpasses the 24,750–24,850 resistance zone.
Fundamentals across banking, FMCG, and automotive sectors remain promising, buoyed by domestic policy support and macroeconomic stability.
Nevertheless, the continuation of current market valuations largely depends on a visible recovery in corporate earnings and the resolution of India-US trade tensions, according to analysts.
Meanwhile, the rupee continued to depreciate, pressured by ongoing FII outflows and increased geopolitical risks arising from US trade policies.
Investor attention will be directed towards upcoming US economic metrics, especially inflation and employment figures. Domestically, the RBI's policy decisions and industrial production statistics will be crucial in influencing market sentiment.
Point of View
It's crucial to emphasize that these fluctuations in market indices reflect broader economic concerns, particularly surrounding trade relations and policy decisions. While the current environment poses challenges, it also presents opportunities for informed investors. NationPress remains committed to delivering accurate analysis and updates, ensuring our readers stay informed during this volatile period.
NationPress
27/09/2025
Frequently Asked Questions
What caused the decline in Nifty and Sensex this week?
The decline was primarily fueled by concerns regarding a potential increase in H-1B visa fees and the announcement of US tariffs on pharmaceutical imports.
How much did the Nifty and Sensex drop this week?
Nifty and Sensex experienced declines of around 2.50 percent and 2.54 percent, respectively.
What impact did the US tariffs have on Indian pharmaceutical stocks?
The announcement of tariffs led to a significant drop in shares of Indian pharmaceutical companies.
What are analysts predicting for the Nifty index?
Analysts suggest that sellers will likely continue to dominate unless the index breaks through the 24,750–24,850 resistance zone.
What economic indicators should investors watch next?
Investors should focus on upcoming US economic indicators, particularly inflation and employment data, as well as the RBI's policy decisions.
