Sensex and Nifty erased early gains and turned flat by midday on 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 11:55 AM, the Nifty 50 was down 15 points at 22,532, while the BSE Sensex slipped 17 points to 74,619. On the NSE, 494 shares advanced and 2,055 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 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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Investor caution ahead of the monthly derivatives expiry added to the volatility, with traders bracing for choppy moves as February contracts are either squared off or rolled over to March.
According to Bahety, two dominant forces are shaping the market: foreign institutional investors (FIIs) on the selling side and domestic institutional investors (DIIs) on the buying side. "If FIIs pause selling, we could see a strong recovery—but that remains uncertain. Until then, volatility and pressure will persist, with FIIs using every rally to offload stocks," he said.
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 struggled, with the BSE Midcap index down 1 percent and the BSE Smallcap index slipping 2 percent.
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Among sectoral indices, Nifty Auto, Nifty Realty, and Nifty Media were the worst hit, falling 1–2 percent. The auto index lost 1.4 percent after two days of gains, dragged down by Mahindra & Mahindra, Tata Motors, and Bajaj Auto, which declined between 1–2 percent.
Meanwhile, Nifty Bank rose half a 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.
Among the Nifty 50, Grasim, Hero MotoCorp, Trent, M&M, and UltraTech Cement were the biggest laggards, falling between 2–6 percent. Meanwhile, HDFC Bank, IndusInd Bank, Bajaj Finserv, Bajaj Finance, and Shriram Finance led the gainers, rising 1–5 percent.
Bajaj Finance rose 2.5 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 6 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 9 percent after a fire at its NFY spinning plant in Bharuch, Gujarat, temporarily disrupted production. No injuries or casualties were reported.
Anand James, Chief Market Strategist at Geojit Financial Services, said a recovery attempt could test the 22,620–22,730 range. "But as maintained all this week, we will wait for 22,950 to be conquered, as a confirmation of strength. Downside marker for the day may be placed at 22,530, with deeper support seen at 22,300." he added.
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