Indian Stock Market Falls 600 Points: Fed's Cautious Tone & Dr Reddy's Setback Dampen Sentiment

Indian stock markets witnessed a sharp decline on Thursday, October 30, 2025, with benchmark indices ending deep in the red despite encouraging quarterly earnings from several heavyweights. The BSE Sensex plummeted 593 points, or 0.70%, to close at 84,404.46, while the NSE Nifty50 fell 176 points, or 0.68%, to settle at 25,877.85.

The market downturn came as a surprise to many investors, especially given the positive backdrop of strong Q2 results from blue-chip companies like ITC, Canara Bank, and Hyundai Motor India. However, global headwinds and specific stock-level concerns overshadowed the domestic positives, leading to widespread selling pressure across most sectors.

Fed’s Rate Cut Comes with a Cautious Warning

The primary catalyst for today’s market weakness was the US Federal Reserve’s policy announcement. While the Fed delivered a widely expected 25 basis point rate cut—bringing the federal funds rate to a range of 3.75-4%—it was Fed Chair Jerome Powell’s cautious commentary that rattled global markets.

Powell indicated that further policy easing was unlikely in the near term, essentially ruling out a December rate cut. He cited the absence of fresh economic data due to the ongoing US government shutdown and emphasized that the central bank needed more clarity before making additional moves. This hawkish tone dampened risk appetite across emerging markets, including India.

”The Fed decision to cut rates by 25 basis points was on expected lines, so markets did not react sharply. The lack of clarity on future rate action has shifted focus to the upcoming Trump-Xi summit in South Korea,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The Fed’s announcement also came with internal dissent—two members voted against the consensus, with one favoring a larger 50 basis point cut and another opposing any cut at all. This division highlighted the uncertainty surrounding the US economic outlook and future monetary policy direction.

Dr Reddy’s Labs Crashes on Canadian Regulatory Setback

The day’s biggest loser was Dr Reddy’s Laboratories, which plunged 3.79% to close at ₹1,203.50—marking a five-month low for the pharmaceutical giant. The stock had fallen as much as 5.6% intraday, making it the worst performer on both the Nifty50 and Nifty Pharma indices.

The sell-off was triggered by a non-compliance notice from Health Canada regarding Dr Reddy’s Abbreviated New Drug Submission (ANDS) for its semaglutide injection. Semaglutide is the active ingredient in Novo Nordisk’s blockbuster weight-loss drug Wegovy and diabetes medication Ozempic—two of the highest-selling medications globally.

Dr Reddy’s was positioned to be among the first generic competitors to launch semaglutide in Canada when the patent protection expires in January 2026. The company had invested significant resources in developing this generic version, with expectations of substantial revenue from the Canadian market.

Analysts at JP Morgan projected that Dr Reddy’s could generate $30 million in revenue from Canadian semaglutide sales in fiscal year 2026, rising to $100 million in fiscal 2027. However, the regulatory notice now threatens to delay the launch by several months, potentially eroding the company’s first-mover advantage.

”This delay has weakened the scope of semaglutide injection business from the Canadian market in the March 2026 quarter. The additional information requirement by the Canadian health regulator prolongs the prospects of generic Ozempic availability,” noted Motilal Oswal Financial Services in a research report.

The broader pharma sector also felt the impact, with Cipla falling 2.54% and Sun Pharma declining 0.93%, reflecting investor concerns about regulatory uncertainties in key international markets.

Foreign Fund Outflows Add to Market Pressure

Adding to the market’s woes, Foreign Institutional Investors (FIIs) turned net sellers on October 29, offloading equities worth ₹2,540 crore. This marked a reversal from the strong buying seen earlier in October, when FIIs had pumped over ₹10,000 crore into Indian equities.

The renewed selling pressure came despite India’s attractive valuations and positive earnings momentum. Market participants attributed the FII exodus to global risk-off sentiment triggered by the Fed’s cautious stance and ongoing geopolitical tensions.

The India VIX, often referred to as the fear gauge, rose 1.5% to 12.16, indicating increased market volatility and nervousness among traders about near-term direction.

Trump-Xi Meeting Adds to Uncertainty

Investor caution was further amplified by the much-anticipated meeting between US President Donald Trump and Chinese President Xi Jinping at the APEC summit in South Korea. Markets globally were on edge, awaiting cues on potential progress in US-China trade negotiations.

The two leaders met on Thursday morning (IST) to discuss critical issues including tariffs, rare earth minerals, and technology trade restrictions. While Trump expressed optimism about reaching a “comprehensive agreement,” analysts remained skeptical about any immediate breakthrough given the deep-rooted tensions between the world’s two largest economies.

Any negative outcome from this high-stakes meeting could trigger further volatility in global markets, making Indian investors cautious about taking fresh positions.

Sectoral Performance: Mixed Bag Across Indices

The market breadth on October 30 was decisively negative, with only seven stocks in the 30-share Sensex basket closing in the green. Among the sectoral indices, all major segments ended in the red, reflecting the broad-based nature of the sell-off.

Top Sectoral Losers:

• Nifty Pharma: Down 1.1%, led by Dr Reddy’s steep decline
• Nifty IT: Down 0.9%, with Infosys falling 1.19% and Tech Mahindra dropping 1.13%
• Nifty Telecom: Bharti Airtel declined 1.70%, dragging the index lower

Relative Outperformers:

• Nifty Metal: Showed resilience with Hindalco gaining 0.60%
• Nifty Infra: Coal India and Larsen & Toubro provided some support

Despite the overall weakness, select heavyweight stocks managed to buck the trend. Coal India emerged as the top Nifty50 gainer, rising 1.49% to ₹387.70, supported by expectations of strong demand in the upcoming winter season. Larsen & Toubro (L&T) advanced 0.74% to ₹3,987.50 following its impressive Q2 results where net profit jumped 16% year-on-year to ₹3,926 crore.

Other gainers included Bharat Electronics (up 0.66%), Hindalco Industries (up 0.60%), and Nestle India (up 0.54%), demonstrating pockets of strength amid the broader market weakness.

On the flip side, financial services and telecom stocks bore the brunt of selling. HDFC Life Insurance fell 2.01%, Power Grid Corporation declined 1.19%, and Bajaj Finance dropped 1.47%, reflecting profit-booking in recently outperforming counters.

Q2 Earnings Season Delivers Positive Surprises

Amidst the market turbulence, India Inc continued to showcase impressive quarterly performance, with several major corporates beating analyst expectations.

ITC Limited reported a standalone net profit of ₹5,180 crore for Q2 FY26, marking a 2% year-on-year increase and surpassing Bloomberg consensus estimates of ₹5,062 crore. The diversified conglomerate’s cigarette business remained robust with 7% revenue growth, while its FMCG segment (excluding cigarettes) also grew 7% despite operational challenges from excessive rains and GST transition disruptions.

The company’s EBITDA margin expanded to 32.26% from 30.83% in the previous year, demonstrating operational efficiency and effective cost management. However, revenue from operations declined 3.4% to ₹18,021 crore due to a sharp 31% fall in the Agri Business segment.

Canara Bank delivered stellar results, with standalone net profit surging 19% year-on-year to ₹4,774 crore. The public sector lender’s asset quality showed marked improvement, with gross non-performing assets (GNPA) ratio declining to 2.35% from 3.73% a year ago. Net NPA ratio fell to just 0.54% from 0.98%, reflecting strong recovery efforts and prudent risk management.

The bank’s stock responded positively, jumping 4% intraday to hit a near 15-year high of ₹134.20, making it one of the few bright spots in an otherwise gloomy trading session.

Hyundai Motor India posted a 14.3% increase in consolidated net profit to ₹1,572 crore, driven by robust export growth of 21.5% and effective cost reduction measures. The South Korean automaker’s focus on premium SUVs and improved operational efficiency helped it navigate subdued domestic demand, with exports now accounting for a larger share of total volumes.

These strong earnings underscored the resilience of Indian corporates and provided some support to the market, preventing an even steeper decline.

What to Watch Next

As we head into November, several key factors will determine the market’s near-term trajectory:

Global Cues: The outcome of the Trump-Xi meeting in South Korea and any progress on US-China trade negotiations will be critical. A positive breakthrough could trigger a risk-on rally, while stalemate or deterioration could lead to further volatility.

Fed Commentary: Markets will closely parse any additional statements from Federal Reserve officials regarding the December policy meeting. Any hints of potential rate cuts would be viewed positively by emerging markets.

Q2 Earnings Continuation: With more companies set to announce results in the coming weeks, sustained earnings momentum will be crucial to justify current valuations and attract fresh inflows.

FII Flows: The direction of foreign institutional money will be pivotal. A reversal back to buying mode would provide strong support, while continued selling could test key technical levels.

Technical Levels: For Nifty, immediate support lies at 25,700-25,750 zone. A decisive break below this range could trigger further weakness toward 25,500. On the upside, resistance is placed at 26,050-26,100.

Domestic Catalysts: Upcoming macroeconomic data including October inflation numbers, industrial production figures, and festive season consumption trends will provide insights into the health of the Indian economy.

Rupee Movement: The Indian rupee’s performance against the US dollar will remain in focus, especially given the recent FII outflows and firm dollar index levels.

Investors should also monitor developments around Dr Reddy’s regulatory submission in Canada, as clarity on the timeline for semaglutide approval could significantly impact sentiment around the pharma sector.

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Disclaimer

This article is only for information purposes and is not investment advice. Before investing, do your own research or consult a qualified financial advisor. Stock market investments are subject to market risks.