Stock market today: Why Sensex, Nifty are falling

Indian equity benchmarks were trading sharply lower on Tuesday, weighed down by persistent selling in pharma and healthcare stocks. At last check, the benchmark 30-share BSE Sensex pack plunged 617 points or 0.76 per cent to trade at 81,019, while the broader NSE Nifty50 index dropped 177 points or 0.71 per cent to 24,791 level.

According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the weakness in markets comes against the backdrop of sluggish earnings growth and external challenges such as high tariffs.

He noted that while foreign institutional investors (FIIs) have been consistent sellers, domestic institutional investors (DIIs) have stepped in with strong buying, cushioning the fall.

Vijayakumar explained, "Resilient market co-existing with tepid earnings growth has made India the most expensive market in the world. Consequently, FIIs have been sustained sellers, but massive DII buying totally eclipsing FII selling is supporting the market even amidst strong headwinds. Since the principal reason for the market's resilience is liquidity and liquidity flows are likely to sustain, the market is unlikely to correct significantly and the elevated valuations may continue."

Additionally, pharma stocks came under pressure today after US President Donald Trump vowed to slash drug prices in the country by an unprecedented 1,400–1,500 per cent -- a claim considered unrealistic since prices cannot fall below 100 per cent. Such a move, if pursued, could make exports from India to the US uncompetitive.

Trump had earlier written to major global pharmaceutical companies -- including Johnson & Johnson, Pfizer, AstraZeneca, Bristol Myers, GSK, Merck, Novartis, Roche and Sanofi -- directing them to implement price cuts by September 29.

The comments come amid the administration’s tough stance on pharmaceutical pricing and its proposal to impose higher tariffs on medicines imported from India and other countries.

On Nifty's technical setup, Anand James, Chief Market Strategist at Geojit Financial Services, observed that the index’s failure to close above the 25,000 mark has limited the buying momentum.

"Inability to close above 25,000/25,033 region yesterday suggests that buyers are not keen on chasing prices higher. This leaves room for dips. Upswing possibility could diminish if Nifty slips below 24,870, but it would require a direct fall below 24,740 to initiate downside plays," he said.