Pharma and IT Stocks Tumble as Trump's Tariff Talk Shakes Dalal Street

The Indian stock market plunged on Friday, extending its losing streak to a sixth consecutive session, as investors on Dalal Street reacted to the announcement of fresh US tariffs by former President Donald Trump.

The sell-off saw the BSE Sensex crash by approximately 800 points (0.98%) to an intraday low of 80,360, while the NSE Nifty 50 tanked 252 points (1.01%) to a low of 24,638.40. While the downturn was broad-based, the pharmaceutical and IT sectors were hit the hardest amid fears of an escalating trade war.

The Tariff Tremor: What Sparked the Sell-Off?

On Thursday, former US President Donald Trump announced a new round of tariffs on a range of imported goods. The most significant of these is a proposed 100% levy on branded and patented pharmaceutical products, set to take effect from October 1. This move has rattled investors, as the United States is a critical market for Indian pharmaceutical firms, accounting for over a third of the country’s total pharma exports.

The announcement also included a 25% duty on heavy-duty trucks and a 50% levy on kitchen cabinets and furniture, deepening concerns that these measures could escalate into a full-blown trade war, impacting a wide range of Indian exports and corporate earnings.

Pharma and IT: The Hardest-Hit Sectors

The Nifty Pharma index was among the biggest losers, dropping over 2%. Major pharmaceutical stocks like Sun Pharma and Dr. Reddy’s Labs saw declines of up to 5%. Sun Pharma, in particular, touched a new 52-week low of Rs 1,547.25 on the BSE. While the immediate impact is on branded and patented drugs, a lingering fear remains that these tariffs could be extended to include generic drugs, which form the bulk of Indian pharma exports to the US.

The IT sector, already under pressure from a recent hike in H-1B visa fees, also felt the heat. The Nifty IT index slid by 2.42%. With the US being the primary market for Indian IT services, any protectionist measures from Washington are a major cause for concern. Stocks like Tata Consultancy Services (TCS) slumped to a 52-week low, with other major players like Infosys, Tech Mahindra, and HCL Technologies also posting significant declines.

Broader Market Impact and FPI Outflows

The negative sentiment was not confined to the pharma and IT sectors. The broader market witnessed a significant sell-off, with the BSE Midcap index falling by 1.74% and the BSE Smallcap Index by 2.02%.

Compounding the issue is the relentless selling by Foreign Portfolio Investors (FPIs), which has contributed significantly to the market’s decline. In September alone, FPIs have offloaded stocks worth ₹13,450 crore, bringing their total net sales in 2025 to a staggering ₹1,44,085 crore. This sustained selling pressure, coupled with uncertainty around the upcoming quarterly earnings season and the US Federal Reserve’s cautious stance on interest rate cuts, has created a perfect storm for the Indian market.

What Should Investors Watch Next?

For retail investors, the current market volatility can be unnerving. Here are key factors to monitor in the coming days:

• US-India Trade Developments: Any clarification, negotiation, or response regarding the proposed tariffs will be critical.
• Upcoming Quarterly Earnings: Corporate results will offer a clearer picture of the health of Indian companies and the broader economy.
• FPI Activity: A reversal in the heavy selling trend from FPIs could provide much-needed support to the market.
• Nifty 50 Technical Levels: The 24,900 level is a crucial support zone. A sustained break below this could signal further weakness, with the next support levels seen at 24,700 and 24,600.

The current market turbulence serves as a stark reminder of how interconnected global events are with domestic investments. For now, a cautious and well-researched approach is paramount for navigating the uncertainty.

Disclaimer: This article is for informational purposes only and should not be considered investment advice. Please conduct your own research before making any investment decisions.