Sensex At Three-Week Low, Nifty Below 24,700: Do Small & Mid Caps Offer Buying Opportunities?

Stock Market Today: Domestic equity benchmarks Sensex and Nifty 50 fell to a three-week low on Friday, Sept. 26, logging their steepest weekly drop in nearly eight months, as US curbs on H-1B visas and high tariff rates on branded drugs dampened investor's sentiment. The NSE Nifty 50 fell 0.95% on the day to 24,654.7, while the 30-share BSE Sensex dropped 0.9% to 80,426.46. Both frontline indexes lost 2.7% for the week.

The equity benchmarks snapped a three-week gaining streak and also underperformed the broader market indices for the week. The Nifty 50 hit below the 24,700-mark, falling for the sixth straight session and pared a two-week gain. Previously, Nifty 50 closed below 24,700 on Sept. 2, 2025.

All 16 major sectors ended lower, with Nifty IT and pharmaceuticals (Nifty Pharma) hit the hardest on concerns over their US exposure. The IT index sank nearly 8% for the week, its steepest fall in about seven months, after US President Donald Trump imposed a $100,000 fee on new H-1B visas.

Analysts said the move could raise the operating costs for Indian IT firms, which earn a large share of their revenue from the US. All constituents of Nifty fell after Accenture's earnings. Sentiment worsened after the tech bellwether full-year revenue outlook indicated that the major IT companies will continue to face sluggish demand ahead.

"Investor sentiment was rattled by a fresh wave of tariffs targeting the pharmaceuticals, dragging pharma stocks deep into the red. Accenture’s weaker guidance and job cuts highlighted slowing IT spending, with AI-driven growth failing to meet expectations, prompting a broad sell-off in tech shares," said Vinod Nair, head of research, Geojit Investments Ltd.

"While IT stocks have been dragging Indian markets this week, Trump turned his attention to the pharma sector out of the blue on Thursday," said Vinit Bolinjkar, head of research at Ventura Securities.

Mahindra and Mahindra and IndusInd Bank fell the most in the Nifty pack. Laurus Labs, Biocon fell over 4.5% for the day after the 100% tariff rate. Defensive players FMCG, oil & gas fell the least despite deep cuts in the market. Nifty PSU Banks snapped a three-week gaining streak.

Sensex and Nifty underperformed the broader market indices for the week. As many as 3,100 stocks declined while 1,041 advanced and 139 remained unchanged on the BSE. Nifty Midcap 150 fell over 4% for the week, while Coforge and Mphasis fell the most in the Nifty Midcap 150 pack. Nifty Smallcap 250 fell over 4% for the week, while Caplin Point and Avanti Feeds fell the most. Caplin Point, Avanti Feeds, Redington, Sumitomo Chemical and Balrampur Chini Mills fell over 10% for the week.

According to N ArunaGiri, Founder & CEO at TrustLine Holdings, while benchmark indices like the Nifty may not see a decisive breakout soon, selective opportunities continue to emerge in small- and mid-cap stocks. The recent weakness in these segments has opened up attractive entry points for patient investors who focus on quality businesses.

However, Amol Athawale, VP Technical Research, Kotak Securities warned that short-term traders should remain cautious and be very selective, as there is a risk of getting trapped at lower levels. A range-bound market with a mild positive bias tends to be the best setup for bottom-up stock picking, especially in the broader small- and mid-cap space.

"This is not a market for chasing the index. It's a market that rewards thoughtful, selective stock picking in the broader space. We believe that this phase presents a constructive environment for long-term investors, particularly those willing to take a bottom-up approach in identifying fundamentally strong companies in the broader small and mid-cap space!," said N ArunaGiri.