Indian benchmark indexes Sensex and Nifty opened lower on February 24, tracking a global market slump as U.S. equities tumbled overnight on concerns over softening consumer demand and tariff threats. U.S. consumer sentiment hit a 15-month low in February, while inflation expectations soared due to President Donald Trump’s proposed tariffs, adding to investor worries. Most Asian markets followed suit, mirroring Wall Street’s losses amid growing economic uncertainty.
At 9:50 AM, the Sensex was down 690 points, or 0.9 percent, at 74,619, while the Nifty 50 slipped 205 points, or 0.9 percent, to 22,590. Both indexes have now shed over 13 percent from their record highs in late September 2024, weighed down by fears of slowing earnings growth and escalating trade tensions. On the NSE, 348 shares advanced while 2,069 declined.
"The market is facing headwinds from relentless FII selling and global uncertainties relating to Trump tariffs. The sharp surge in Chinese stocks is another near-term headwind," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. "The ‘Sell India, Buy China’ trade may continue for some time since Chinese stocks continue to be attractive."
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"In the US, long-term inflation expectations are rising and, therefore, the expected rate cut by the Fed is unlikely to materialise. The Fed might even turn hawkish, impacting US stock markets. If this happens and the US bond yields start declining, FIIs may cease to be sellers in India and may even resume buying. The near-term scenario is highly uncertain," Vijayakumar added.
Stagflation—marked by slowing growth and rising prices—in the world’s largest economy is a troubling sign for India’s export-driven sectors, particularly IT. It also makes India and other emerging markets less attractive to foreign investors, who may pivot toward safer assets like the dollar and U.S. treasuries.
So far in February, FIIs have net sold Indian equities worth Rs 36,977 crore, while domestic institutional investors (DIIs) have stepped in, net buying shares worth Rs 42,601 crore.
Broader markets underperformed, with the BSE Midcap falling 1.6 percent and BSE Smallcap sliding over 2 percent. "The positive factor in our market is that the valuations of largecaps have turned fair and in certain segments like financials attractive, giving opportunities for long-term investors to buy. Even though the broader market valuations continue to be high, there are opportunities in select stocks in this segment," Vijayakumar noted.
Excluding Nifty Pharma and Nifty Healthcare, all 11 other sectoral indices were in the red. Nifty IT was the worst hit, sliding over 2 percent, weighed down by Infosys and TCS.
On the Nifty 50, TCS, Trent, Shriram Finance, Wipro, and HCLTech led the losses, dropping 2-3 percent. Meanwhile, Maruti Suzuki, BPCL, Sun Pharma, M&M, and Dr. Reddy’s were the top gainers, rising 0.5-1 percent.
Shares of NTPC Green Energy, the recently listed subsidiary of NTPC, plunged 8 percent, extending losses for a second straight session as the expiry of its three-month shareholder lock-in period triggered selling pressure.
Last week, the Sensex and Nifty struggled under selling pressure, particularly in auto and financial stocks. A sharp sell-off on Wall Street, concerns over Trump’s tariffs, persistent U.S. inflation, and the Fed’s cautious stance on rate cuts all contributed to investor jitters. Meanwhile, a renewed global appetite for Chinese stocks has led to a shift in foreign fund flows, further weighing on Indian equities.
"Since Nifty has been hovering around the lower band of 22,900-22,700 for the last few days and has rejected all attempts to convincingly cross the 23,000 mark, the key support of 22,700 seems in jeopardy. As a result, we would see it entering a crucial support zone of 22700-22400, where the actual litmus test lies for our markets," said Osho Krishnan, Senior Technical & Derivatives Analyst at Angel One.
Krishnan added that the first key resistance for Nifty stands at 23,000-23,150, aligned with the 20-day exponential moving average (DEMA), followed by a stronger barrier at 23,300-23,350, marking the upper band of the wedge pattern. "It is only through a decisive breach of these resistances that some relief and upward movement may be restored for market participants, potentially providing a much-needed boost to investor confidence."
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