Indian equity benchmarks, Sensex and Nifty, ended largely unchanged on February 27 after trading near the flatline throughout February 27, as weakness in auto stocks outweighed gains in financials, which rallied after the Reserve Bank of India partially reversed stricter lending rules for small borrowers and non-bank lenders. The mood remained cautious amid renewed uncertainty over tariffs, with U.S. President Donald Trump hinting at delaying steep import duties on Mexico and Canada until April 2 while also proposing a hefty 25 percent reciprocal tariff on European cars and other goods.
By close, the BSE Sensex was down 37 points to 74,564, while the Nifty 50 was down 38 points or 0.2 percent at 22,509. On the NSE, 477 shares advanced and 2,146 shares declined. Indian equities have been under pressure for months, with the Nifty 50 on track for its fifth consecutive month of losses—the longest such streak since 1996. Both benchmarks have declined nearly 14 percent from their record highs in September 2024.
"The primary drivers of this correction have been sustained FII selling and Trump’s unpredictable statements, which have heightened market uncertainty," said Pankaj Karde, President and Head of Institutional Equitie at Asit C Mehta Investment Intermediates. "However, it’s not just external factors at play—the market was already overvalued, and weak quarterly earnings have accelerated the decline."
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Foreign investors have continued to exit Indian equities, selling shares worth Rs 46,792 crore so far in February, while domestic institutional investors (DIIs) have stepped in with net purchases of Rs 50,817 crore.
The broader market underperformed the benchmarks, with the BSE Midcap index down 1 percent and the BSE Smallcap index slipping more than 2 percent.
Among sectoral indices, Nifty Auto, Nifty PSU Bank, Nifty Realty, and Nifty Media were the worst hit, falling 1-4 percent. The auto index lost 1.5 percent after two days of gains, dragged down by Mahindra & Mahindra and Tata Motors which declined 2 percent each.
Meanwhile, Nifty Bank rose 0.3 percent after the RBI eased tighter lending rules for small borrowers and non-bank lenders. Brokerages see this as a positive for large private banks like HDFC Bank, Bandhan Bank, and IndusInd Bank, as well as state-owned lenders and NBFCs, as it could boost credit flow and reduce funding costs.
"The RBI and the government are clearly supporting the Indian banking sector," said Ashish Bahety, Director at NAV Investment. "This is the fourth consecutive action by the RBI—starting with rate cuts, bond purchases, liquidity measures, and now the easing of lending rules."
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Among the Nifty 50, M&M, Tata Motors, Bajaj Auto, Trent, and UltraTech Cement were the biggest laggards, falling between 2–5 percent. Meanwhile, Sun Pharma, Hindalco, Bajaj Finserv, Bajaj Finance, and Shriram Finance led the gainers, rising 2–5 percent.
Bajaj Finance rose 2 percent to hit a record high in intraday trade, buoyed by the RBI’s move to ease lending norms for NBFCs.
UltraTech Cement tumbled almost 5 percent after announcing a $206 million investment to enter the wires and cables business, a move some analysts flagged as a "capital allocation risk."
Shares of Century Enka dropped 10 percent after a fire at its NFY spinning plant in Bharuch, Gujarat, temporarily disrupted production. No injuries or casualties were reported.
"For Nifty, we see a strong support zone between 22,200 and 21,800, while on the upside, 23,000 is acting as an immediate resistance," said Dharmesh Shah, Head of Technical Research at ICICI Securities. "Any minor positive news—either domestic or global—could trigger a sharp recovery, potentially pushing Nifty toward the 23,000 mark in the coming weeks. So, going short at the current level could be a bit risky."
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