Posted on March 26, 2025, by Niftynews
The Sensex and Nifty indices snapped their 7-day winning streak following a sharp decline in pharma stocks. The market witnessed a volatile session, with sharp losses in sectors such as metal, PSU banks, and oil & gas, overshadowing the gains in select stocks. The downturn was mainly driven by rising concerns over tariffs, particularly affecting the pharmaceutical industry, and profit booking that weighed on overall sentiment.
Pharma Sector Hits and Tariff Concerns
The pharma sector took a significant hit as reports regarding tariff concerns continued to affect investor confidence. The Insurance Regulatory and Development Authority of India (IRDAI) concerns over tariffs imposed on pharmaceutical products, and the ongoing trade tensions exacerbated by US tariffs contributed to the pharma stock slump.
With US consumer confidence plunging to its lowest point in over four years due to fears of recession and higher inflation, the looming risk of tariffs on countries like India and China became a significant concern for investors. Tariff threats could disrupt the pharma industry, which relies heavily on global exports, particularly to the US market.
Sensex and Nifty Market Performance
At 9:50 AM, the Sensex was down by 183.23 points or 0.23%, settling at 77,833.96, while the Nifty slipped by 37.40 points or 0.16% to 23,631.25. The broader market also showed weakness, with the Nifty Midcap 100 down by 0.2% and the Smallcap 100 falling by 0.6%.
Around 1,853 stocks saw a decline, and only 1,194 stocks advanced, signaling a broad-based market weakness. This reversal followed a period of positive momentum, where the markets had been driven by IT sector resilience and foreign institutional investor (FII) inflows.
Global Economic Factors and US Tariff Concerns
Concerns about the potential escalation of US tariffs on India were magnified by the plunge in US consumer confidence. The US has been contemplating imposing secondary tariffs of 25% on countries like India and China, particularly targeting Venezuelan oil imports. While there was hope that former US President Donald Trump might reduce some tariffs on India, these new tariff threats added a layer of uncertainty in global markets.
Siddhartha Khemka, Head of Research at Motilal Oswal, mentioned that while investor uncertainty remains high over reciprocal tariffs, FII inflows and a strong rupee are expected to provide a cushion, allowing the market to maintain a gradual uptrend. The total FII buy figure of ₹19,136 crore in the last four trading days is a positive sign of sustained foreign investor interest.
Sectoral Performance and Market Movers
Among the sectors, IT, metal, pharma, and PSU bank stocks were the major laggards, declining up to 0.8%. Consumer durables, energy, and auto stocks also showed weakness, while the FMCG index was the only gainer, rising by 0.2%.
IndusInd Bank, Bharti Airtel, Power Grid Corp, Bajaj Finserv, and BPCL emerged as the top gainers on the Nifty, while Axis Bank, Shriram Finance, L&T, Asian Paints, and Kotak Mahindra Bank were among the laggards.
Broader Market Weakness
Despite the rally in select stocks, the broader market continued to show weak trends. The Nifty Midcap 100 and Smallcap 100 indices faced notable declines. Analysts remain cautious, citing valuation concerns and the upcoming earnings season as key factors that could provide further clarity on the market’s trajectory.
Looking Ahead: Support and Resistance Levels
Technically, the Nifty has encountered resistance at its previous swing high, which triggered a volatile session before settling slightly lower. Key support is seen around the 23,300 level, reinforced by the 100-EMA. Immediate support lies at 23,600, and a break below this could push the index toward 23,300. On the upside, a breakout above 23,800 could reignite the rally.
For Bank Nifty, support is placed at 51,100, with an additional cushion at 50,800. The resistance remains at 52,100, which needs to be breached for further upside.
