Sensex tanks 733 points, Nifty 50 below 24,700: Why did Indian stock market fall today? Explained with 5 reasons

The benchmark equity indices — BSE Sensex and NSE Nifty — faced a massive selloff in trade on Friday, September 26, taking their fall to the sixth consecutive session as fresh Trump tariffs on pharma and relentless selling by foreign portfolio investors (FPIs) hurt investor sentiment.

Sensex crashed 800 points, or 0.98% to hit a low of 80,360 in the afternoon trade. The index finally settled the day at 80,426, down 733 points, or 0.90%.

Meanwhile, its NSE counterpart Nifty 50 tanked 252 points, or 1.01% to a low of 24,638.40. It finally ended the session down 236 points, or 0.95% at 24,655.

Amid the bloodbath on Dalal Street, the market capitalisation of listed companies on BSE declined to 450.61 lakh crore, resulting in investor wealth erosion of ₹6.73 lakh crore.

5 reasons behind Indian stock market crash

What is behind the fall in the Indian stock market today? Here are the top factors:

1. Tariff jitters dent D-Street sentiment

Fresh Trump tariffs on the pharma sector sent jitters on Dalal Street, with investors already grappling with the impact of a 50% levy on Indian exports.

On Thursday, US President Donald Trump unleashed a fresh round of punishing tariffs on a broad range of imported goods, including branded and patented drugs, and heavy-duty trucks, effective October 1.

The US accounts for slightly more than a third of India's pharmaceutical exports, as per a Reuters report, resulting in an over 2% decline in the pharma index and up to 5% fall in pharma stocks, including index constituents like Sun Pharma and Dr Reddy's Labs.

According to G Chokkalingam, Founder, Equinomics Research, until the market sees some optimism in terms of a bilateral treaty or agreement between the US and India being signed amicably, the market will remain subdued.

2. H-1B visa woes weigh

Meanwhile, last week, the U.S. administration increased the H-1B visa fee to $1,000, a move that has weighed heavily on Indian IT stocks. Given that the index has a significant weightage of IT companies, the decline in these stocks has also had a broader negative impact on the overall index performance.

With the H-1B visa fee hike, the Trump tariff impact has now essentially extended to the services sector. Indians account for 70% of the H-1B visas issued annually.

IT stocks have been in a downward trend for six straight days, with Tata Consultancy Services — an Indian firm with the highest H-1B visas — slumped to its 52-week low today. Infosys, Tech Mahindra, and HCL Technologies have also seen a significant decline during this period.

3. Fed rate cut bets recede

An upbeat US GDP data has dampened hopes of further rate cuts by the American central bank. According to a Reuters report, investors now see an 87% and 62% chance of rate cuts by the US Federal Reserve in October and December, respectively, down from 91% and 76% before the data, per the CME FedWatch Tool.

Earlier this week, Federal Reserve Chair Jerome Powell signalled a cautious approach to future interest rate cuts.

If the Fed were to cut rates "too aggressively," Powell said, "we could leave the inflation job unfinished and need to reverse course later" and raise rates. But if the Fed keeps its rate too high for too long, "the labour market could soften unnecessarily," he added.

4. Relentless FPI selloff

Taking their selling streak to the third consecutive month, foreign portfolio investors have offloaded stocks worth ₹13,450 crore so far in September. With this, the FPI selling has swelled to ₹1,44,085 crore in 2025 so far. According to experts, the sustained FII selling may keep the market under pressure.

While FPIs are selling in India, they are buying in other markets like Hong Kong, Taiwan, and South Korea, resulting in the Indian stock market's underperformance compared to other EMs.

5. Doubts over earnings recovery

Investors also stayed on the sidelines ahead of the upcoming September quarter earnings season. According to N ArunaGiri, Founder & CEO at TrustLine Holdings, meaningful earnings momentum is unlikely to return before FY27, keeping the benchmark indices in what is described as a “time correction” phase — where valuations pause and wait for earnings to catch up.

Chokkalingam, too, believes that with the GST reform implemented only on September 22nd, it will take time to show results. He does not believe earnings will show any major improvement in Q2.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.