Week in Review: Indian Markets Under Pressure — Sept 22–26, 2025

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27 Sep, 2025

Week in Review: Indian Markets Under Pressure — Sept 22–26, 2025

Opening Thoughts

It was a bruising week for Indian equity markets. From bullish undertones just days ago, we shifted into risk mode. The confluence of international policy shocks, a sharp rethinking of pharma trade risk, and sustained foreign capital outflows eroded investor confidence. For market participants — retail, institutional, or policy watchers — this week underscored how vulnerable even large indexes can be when macro news hits.

Key Storylines

Tariff Shock to Pharma
Perhaps the biggest headline came mid‐week: a 100% tariff on Indian branded drugs by the U.S. This rattled pharma names across boardrooms and trader desks. The sector, which had been a pillar of exports, now faces revenue and margin uncertainty. The knock-on effect extended to index heavyweights, dragging broader markets lower.
Let’s Talk IT & Visa Risk
Indian IT firms—notably those heavily dependent on U.S. clients—reacted nervously to hints of tighter visa rules, fee hikes, and slower spending. When your client geography is under threat, investor reflex is to price in risk.
Foreign Investors Yielding to Caution
FIIs have been sellers this week, applying pressure on equities and eroding liquidity. In contrast, domestic institutions have tried to step in, but their purchases were overwhelmed.
Technical Lines are Being Crossed
Key supports for Nifty and Sensex were tested, if not breached. Resistance levels are now sharply defined, and investors will closely watch how the market behaves around them next week.
Sentiment & Volatility Spike
With risk aversion back in the driver’s seat, volatility is no longer a backdrop — it’s center stage. Option premiums, VIX readings, and futures pricing all show markets are bracing for more swings.

What Could Unfold Next Week?

Bounce attempts may emerge, especially if global cues (U.S., Europe) turn favorable or if India rolls out supportive policy responses.
But further leg down cannot be ruled out if macro pressures intensify (more tariffs, capital flight, slowing earnings outlooks).
A key pivot will be whether Nifty can reclaim and sustain above 25,365–25,400. Failure to do so may open the door to deeper declines.
Sector rotation could happen: defensive sectors (FMCG, utilities) or domestic‐oriented plays may outperform riskier exports/tech names.

What Investors Should Watch Closely

Foreign flows (FII / DII) day by day
Pharma policies / trade negotiations and how India responds
IT / global demand outlook & visa / regulatory reforms
Rupee movement — weakness may exacerbate inflation/import cost fears
Earnings guidance for major companies, especially exporters
Support levels (both technical and psychological) around 24,700–25,000 zones

Final Word

This week was a sobering reminder: momentum can turn quickly when policy or global shocks hit. The resilience of the Indian market is being tested. For now, a defensive posture with calibrated entry into beaten down names may be prudent, rather than chasing speculative upside.

By Nehal Taparia

This content is for educational and knowledge purposes only and should not be considered as investment or Trading advice. Please consult a certified financial advisor before making any investment or Trading decisions.

Our Recent FAQS

Frequently Asked Question &
Answers Here

Q1. Why did markets fall so sharply this week?

A mix of adverse global cues (tariffs, U.S. policy shifts), capital outflows by foreign investors, and weak sectoral triggers (notably pharma/IT) combined to weigh heavily on sentiment.

Q2. Are the declines over, or might more downside remain?

More downside is possible, especially if negative macro news continues. That said, markets may also bounce if policy support or global sentiment improves. Key levels (resistances, supports) will determine the likely path.

Q3. Which sectors are most vulnerable now?

Sectors reliant on exports, global demand, or regulatory risk—like pharma, IT / software services—are most exposed. In contrast, consumer staples, utilities, or domestic‐oriented sectors may show relative resilience.

Q4. Should I exit equities now or reduce exposure?

It depends on your risk appetite and time horizon. For short-term traders, trimming exposure or hedging might make sense. Long-term investors might hold core positions but stay cautious about new speculative buys.

Q5. What role do foreign investors play in all this?

A big role. Their inflows or outflows can drive large swings in liquidity, valuations, and sentiment. Sustained outflows, like what we saw this week, can amplify downsides.

Q6. How important is the rupee in this scenario?

Very. If the rupee weakens, import costs (especially for energy, capital goods) rise, which can push inflation. Also, a weaker currency can deter foreign investment, creating a vicious cycle.

Q7. What should I watch next week to gauge direction?

Key indicators include: • Daily FII flows • Moves in U.S. markets and global yields • Government / RBI responses (policy, intervention) • Corporate earnings and guidance • Reaction of indices at technical levels (especially around 25,365, 25,200, and for Sensex around 82,000)