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India’s Falling Stocks Hide Pharma and AI Infrastructure Winners
India’s stock market has been falling, but not every company is losing value.
Foreign investors have been selling shares while oil prices, interest rates and concerns about the rupee have pressured the market.
Pharmaceutical companies have done especially well recently.
Some Indian drug manufacturers may gain new business because US companies are looking for suppliers outside China.
A weaker rupee can also help companies that earn money from exports.
Companies that build data-centre and AI equipment have also seen large share-price gains.
Some smaller companies have risen faster than large companies because investors expect stronger growth from them.
New share offerings, called IPOs, have attracted a lot of money.
Analysts say the market looks weak on the surface but still has active areas underneath.
India’s Sensex and Nifty fell nearly 1% early Tuesday after dropping 1.5%-1.6% on Monday.
Both benchmark indices are down more than 6% in September amid foreign outflows, expensive crude, a weak rupee and high global interest rates.
The Nifty Pharma index has gained 6% in three months and 23% since early April, led by several pharmaceutical companies.
Indian contract drug manufacturers are benefiting from demand linked to the United States’ BIOSECURE Act and a weaker rupee.
AI infrastructure, selected mid- and small-cap stocks, and the IPO market remain areas of relative strength despite the broader decline.
- Who
- India’s stock-market investors, pharmaceutical companies, AI-infrastructure companies, and selected mid- and small-cap businesses are involved.
- What
- Indian benchmark stocks are falling, while pharmaceutical, AI-infrastructure, and selected smaller companies are outperforming.
- Where
- India’s share market, with effects linked to the United States, China and renewed tensions in West Asia.
- When
- The latest decline occurred early Tuesday, following a sharp fall on Monday; the article discusses performance through September 2026.
- Why
- Foreign investors have exited amid high crude prices, a weak rupee, elevated global interest rates and weaker enthusiasm for AI-related returns; some sectors are benefiting from exports, new demand and sector rotation.
Broader Market Pressure
Sector-Specific Opportunities
Overall market direction
Broader Market Pressure
Foreign investor exits, high crude prices, a weak rupee and elevated global interest rates are weighing on India’s benchmark indices.
Sector-Specific Opportunities
Motilal Oswal Financial Services says the market is active beneath the surface, with gains in pharmaceuticals, AI infrastructure and selected smaller companies.
Mid- and small-cap stocks
Broader Market Pressure
Analysts caution that the segment remains somewhat frothy, while large parts of the market have suffered from negative sentiment.
Sector-Specific Opportunities
Some investors find smaller companies more attractive because large-cap valuations appear to offer limited upside and smaller companies may deliver faster earnings growth.
AI-related investment
Broader Market Pressure
Questions remain about the long-term feasibility and profitability of the AI investment boom.
Sector-Specific Opportunities
Companies supplying data-centre infrastructure, optical cables, electrical components and printed circuit boards are gaining because data centres continue to be built.
Key facts
- Benchmark performance
- The Sensex and Nifty were down almost 1% early Tuesday after falling 1.5%-1.6% on Monday.
- September decline
- Both indices are down more than 6% in September.
- Crude price
- India’s crude oil basket was priced at $120.86 per barrel on Friday, according to the article.
- Pharma performance
- The Nifty Pharma index gained 6% over three months and 23% since the start of April.
- Top stock gain
- Sterlite Technologies rose almost 700% during 2026, while E2E Networks more than tripled.
- Drug manufacturing shift
- The United States passed the BIOSECURE Act in December 2025, prompting pharmaceutical companies to seek alternatives to Chinese biotechnology supplies.
- Public-market fundraising
- The article says Rs 10.1 lakh crore was mobilised through Indian public markets between April 2023 and September 2026.
Quotes
Deven Mistry and Aanshul Agarwal
Analysts at Motilal Oswal Financial Services.
“So, what was hurting the market was helping pharma. It also gave fund managers a defensive argument with earnings visibility, currency tailwind, the US overhang reducing, and IPM (Indian pharma market) growing.”
indianexpress.com
“Between April 2023 and September 2026, a record Rs 10.1 lakh crore was mobilised through public markets, including IPOs, FPOs, OFS and QIPs.”
indianexpress.com
Sources
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