Indian equity markets opened marginally higher on February 27 but soon turned flat as investors braced for heightened volatility ahead of the monthly derivatives expiry. With the Nifty 50’s February contract set to expire, traders prepared for choppy moves as positions were either squared off or rolled over to the March series.
India's benchmark indices had opened higher driven by gains in financial stocks after the Reserve Bank of India eased stringent loan norms for microfinance and non-bank lenders.
By 10 AM, the Sensex was up 13 points, at 74,615, while the Nifty inched up 11 points, to 22,559. Market breadth remained weak, with 604 stocks advancing and 1,041 declining on the NSE. 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.
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Investor sentiment remains fragile, weighed down by concerns over slowing economic and earnings growth, persistent foreign outflows, and renewed trade tensions. Asian markets remained subdued in early trade today as fresh tariff threats from U.S. President Donald Trump dampened sentiment. Trump’s latest tariff threats added to the uncertainty, as he raised the possibility of delaying steep new tariffs on imports from Mexico and Canada until April 2 while also floating a hefty 25 percent “reciprocal” tariff on European cars and other goods.
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.
"Despite this, the market has been trending down. It is possible that the activity of HNIs, UHNIs and family offices which are not reflected in the DII data are also impacting the market. This smart investor category might have been on the sell side since they move with the fundamentals, and, fundamentals have been deteriorating with the cyclical slowdown in GDP growth and corporate earnings," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Broader markets remained mixed, with the BSE Midcap index trading flat while the BSE Smallcap index dropped over half a percent. "Sharp correction in the broader market has made the valuations in certain segments attractive," Vijayakumar noted, adding that defence stocks, which had surged rapidly, have now corrected sharply, offering long-term opportunities.
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Sectorally, financials and metals led the gains, while auto, construction, and IT stocks declined.
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 Nifty 50 stocks, HDFC Bank, Hindalco, Bajaj Finance, Bajaj Finserv, and Shriram Finance led the gainers, rising 1–4 percent. On the downside, Grasim, Hero MotoCorp, Bajaj Auto, Trent, and UltraTech Cement fell 2–5 percent.
Bajaj Finance surged nearly 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.
"On the downside, 22,500 serves as a crucial support level, with a breach below this mark potentially triggering extended selling toward the 22,300–22,000 range," said Hardik Matalia, Derivative Analyst at Choice Broking. "On the upside, immediate resistance is seen at 22,800, followed by a critical hurdle near 23,000."
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