The Indian equity market opened on a cautious note on February 18, tracking mixed global cues as investors weighed slowing corporate earnings, elevated valuations, and concerns over U.S. tariffs. Investor attention is now fixed on the FOMC minutes set to be released on February 19, which could reveal a hawkish Fed stance—dampening expectations for rate cuts in 2025.
At 09:47 AM, the Sensex was down 16 points or 0.02 percent at 75,980, and the Nifty was down 28 points or 0.1 percent at 22,931. About 928 shares advanced, 2,099 shares declined, and 121 shares were unchanged.
On February 17, the markets snapped an eight-session losing streak, closing flat. Gains in heavyweight stocks like HDFC Bank and Reliance Industries helped counterbalance pressures from weak earnings and lingering global trade uncertainties.
"The way we ended yesterday suggests that bulls are trying to defend the January low of 22,800 on a closing basis. We have tested that level almost three times in the last seven to eight trading sessions, but the market has managed to hold," said Ajit Mishra, SVP Research at Religare Broking.
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Mishra highlighted that banking and IT stocks are demonstrating resilience—potentially emerging as market leaders before any further correction. He also pointed to today's weekly Sensex expiry as a catalyst for increased volatility.
The derivatives market continues to reflect investor uncertainty, with large players adopting a consolidation stance with a slight positive bias. Mishra noted that market participants are anticipating a marginal rebound, given that the indices have already witnessed a steep 13-14 percent correction from record highs.
"With support around the 22,700–22,800 mark in Nifty, some consolidation or an uptick is possible before any further decline," he said.
As the earnings season winds down, Mishra believes the market's focus is shifting towards value buying.
"Investors are looking at stocks that have shown earnings visibility and growth prospects post-results. Banking stocks, in particular, are seeing interest due to strong earnings visibility and expectations of a liquidity boost and possible rate cuts." he said.
The broader market struggled, with small- and mid-cap stocks faring worse than the benchmarks. Small-caps confirmed a bear market, while mid-caps remain about 18 percent below their record highs. On the day, both BSE Midcap and BSE Smallcap indices declined 0.6 percent each, underperforming the benchmarks.
Mishra flagged midcap and smallcap stocks as a key concern, warning that while a temporary bounce is possible due to oversold conditions, a clear bottom has yet to form.
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Barring IT, all 12 sectoral indices traded in the green. Banking and oil & gas stocks took the biggest hit, slipping 0.3 percent to 1 percent each. Meanwhile, the Nifty IT index climbed 0.7 percent, driven by gains in Infosys and Persistent Systems.
Shares of Persistent Systems surged 3 percent, breaking a six-day losing streak, after JP Morgan issued an 'overweight' rating and urged investors to ‘buy the dip’ amid the recent correction. The brokerage also set a target price of Rs 7,200 per share—implying an upside of nearly 30 percent from the previous day's closing.
"So, even if we see a bounce in the index, further corrections or volatile swings in small- and mid-caps may continue. For short-term investors, it would be prudent to avoid fresh positions or adding to existing loss-making positions in mid-caps and small-caps until a clear reversal is visible," he advised.
Asia-Pacific markets traded mixed after Chinese President Xi Jinping voiced support for the private sector, encouraging businesses to "show their talents." Meanwhile, U.S. stock markets were closed for President’s Day.
On the brighter side, geopolitical de-escalation between Russia and Ukraine, falling oil prices, a weaker U.S. dollar, and the RBI’s monetary policy stance are emerging as potential tailwinds.
However, foreign institutional investors (FIIs) continue to exit the Indian markets, with net outflows reaching Rs 33,121 crore so far in February.
Grasim, Shriram Finance, Tata Steel, ONGC, and Coal India led the declines, slipping 1-2 percent, while Tech Mahindra, Apollo Hospitals, Maruti Suzuki, HCL Tech, and Dr Reddy’s topped the gainers' list, advancing 0.3-1 percent.
Shares of Zen Technologies remained under heavy selling pressure for the third consecutive session after the company posted a sharp sequential decline in its Q3 earnings. The stock plunged 10 percent today, bringing its total three-day loss to 33 percent.
Shares of ABB India rallied over nearly 5 percent after the company posted strong December quarter results. Net profit soared 56 percent to Rs 528.4 crore in Q4, up from Rs 338.7 crore in the same period last year.
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