The frontline indices Nifty 50 and Sensex extended their eight-session losing streak to open with losses on February 17. The relentless selling by foreign institutional investors, the falling rupee, coupled with the imposition of reciprocal tariffs on Indian exports by US President Donald Trump have weighed on investor sentiment, dragging the markets.
Nifty 50 has dropped for nine consecutive sessions, a fall last seen in May 2011, also marking one of Nifty 50's longest losing streaks.
As there are no strong domestic triggers to influence the markets, participants are paying close attention to global news, currency fluctuations, and institutional flows for directional cues.
At 11:09 am, the Sensex was down 308.95 points or 0.41 percent at 75,630.26, and the Nifty was down 87.70 points or 0.38 percent at 22,841.55. About 993 shares advanced, 2475 shares declined, and 135 shares unchanged.
The sell-off in the broader markets was sharper, with the Nifty Smallcap 100 and Nifty Midcap 100 tumbling over two percent on open.
After all 13 sectoral indices opened in the red, some sectors pared losses to trade with mild gains. The Nifty Realty, Nifty Auto, and Nifty Media indices saw the sharpest losses, falling between 1.5 and 2.5 percent each. On the flip side, the Nifty Pharma and Nifty Media indices traded in the green. Glenmark Pharma, Aurobindo Pharma and Granules India led the gains on the pharma index, rising up to 5 percent.
However, there are a few positive developments that could support the markets: easing geopolitical tensions as Ukraine-Russia may end the war, cooling crude prices cool, the softening dollar, and rising bets that the Reserve Bank of India might cut the benchmark lending rate during the MPC's April meeting.
The ongoing sell-off has pulled the country’s market capitalisation to an eight-month low. The market capitalization of BSE-listed companies dropped below Rs 400 lakh crore for the first time since June 2024.
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Further, as the earnings season for the quarter ended December 31, 2024 wraps up, analysts believe that the results show was disappointing, with single-digit PAT growth for the Nifty and BSE500. This triggered another round of downgrades, though less severe than in September quarter.
V K Vijayakumar, the chief investment strategist at Geojit Financial Services noted that the key reason behind the market's underperformance was a combination of high valuations and a slowdown in corporate earnings.
"The fact is that a modest single digit earnings growth doesn’t deserve high valuations. This is the basic reason behind the relentless FII selling which has impacted the market. The appreciating dollar aggravated the problem," he said, adding, "Only indications of an earnings recovery and declining dollar can reverse the weakening market trend. This may happen soon. India’s macros are strong and a growth and earnings recovery are on the cards."
Going ahead, the performance of the banking and IT sectors will be crucial in determining market direction. Traders should adjust their strategies accordingly, with a strong emphasis on trade management, noted Ajit Mishra – SVP, Research, Religare Broking. "While efforts to hold the 22,800 level continue, the overall market structure suggests further downside risks."
On Friday, Wall Street came kissing distance of recording a fresh record high, shrugging off concerns of Trump's tariffs, which are a few weeks away from implementation. The S&P 500 settled flat, while the tech-heavy Nasdaq Composite gained 0.4 percent, and the Dow Jones Industrial Average slipped 0.4 percent.
On the flip side, economic data coming out of the US has weighed on the dollar. US Retail Sales saw a sharp contraction of -0.9 percent in January, significantly missing the forecasted decline of -0.1 percent. "The disappointing retail sales data has sparked speculation that the Federal Reserve might reassess its rate trajectory, leading to further dollar weakness," noted Amit Pabar, MD, CR Forex Advisors.
On the stock front, shares of Mahindra group firm M&M Ltd. sank five percent despite the auto player seeing an overwhelming response for its new electric SUVs, the XEV 9e and BE 6. Mahindra & Mahindra's newly launched electric sports utility vehicles have received a significant response, recording 30,179 bookings on the first day. The total booking value stands at Rs 8,472 crore (ex-showroom price).
Shares of liquor companies--United Breweries and United Spirits fell up to 2 percent in opening trade after the government slashed tariffs on US bourbon whiskies, makin it cheaper in India. The new tariffs will impose a basic customs duty of 50 percent on bourbon, along with an additional 50 percent levy, making the total tariff 100 percent, still lower than the previous 150 percent.
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