Sensex sheds 700 pts, Nifty slips below 22,900; mid-, small-cap indices enter bear market

12 of the 13 major sectoral indices were in the red.

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India's benchmark indexes—Sensex and Nifty—fell nearly 1 percent on February 12, extending losses for the sixth session driven by U.S. tariff fears and earnings concerns. Today alone, investors saw an erosion of Rs 7 lakh crore in market capitalisation, bringing the total loss to Rs 24 lakh crore over these six trading sessions.

Broader markets underperformed the benchmarks, with both the BSE Midcap and BSE Smallcap indices declining 2-3 percent. They entered bear market territory after falling 20 percent from their all-time highs.

At 10:10 AM, the Sensex was down 745 points or 0.9 percent at 75,547, and the Nifty was down 221 points or 0.9 percent at 22,850. About 455 shares advanced, 2,829 shares declined, and 86 shares were unchanged.Nifty and Sensex declined nearly 3 percent this week alone.

The Midcap index is now down more than 18 percent from its record high in September 2024, and the Nifty Smallcap index has fallen over 20 percent from its peak in December 2024.

In a Senate Banking Committee hearing on February 11, U.S. Federal Reserve Chair Jerome Powell signalled no urgency to cut short-term interest rates, citing a "strong overall" economy with low unemployment and inflation still above the Fed's 2 percent target.

Ruchit Jain, Vice President, Motilal Oswal believes this stance is already factored into the market. "The Fed’s approach is clearly data-dependent, especially with ongoing uncertainties like tariffs that could drive inflation higher."

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Investors now await India's inflation data, due after market close. Consumer inflation is expected to have dropped sharply to a five-month low of 4.6 percent in January due to slowing food price rises, according to a Reuters poll. Lower inflation could provide the Reserve Bank of India with room to address slowing economic growth, which has weighed on corporate earnings and consumption.

Jain highlighted that upcoming CPI and PPI data from India and the US could influence market sentiment. "Market participants will closely watch this data to gauge if the rate cut cycle in the US will continue."

In the previous session, Sensex and Nifty 50 fell 1.5 percent, closing in the red for the fifth session, hit by a mix of global and domestic headwinds. Donald Trump's latest tariff announcement, a sliding rupee, weak Q3 earnings, and persistent FII outflows triggered broad-based selling on February 11.

The market has been under pressure recently, with mid-cap and small-cap stocks facing significant selling. "In the near term, the negative momentum is likely to persist, and any pullback will likely be sold into," said Jain.  While he does not expect a significant sell-off in large-cap names, he anticipates continued underperformance in the mid-cap and small-cap segments. "Once the quarterly results are out and the fiscal season wraps up, we’ll get a clearer picture of which stocks have performed well, and those may start to bottom out," he concluded.

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The Nifty and Sensex lost 2 percent over the last two sessions after U.S. President Donald Trump announced reciprocal tariffs on several countries, a move that could impact the world’s fifth-largest economy. In response, India is considering tariff cuts in at least a dozen sectors to boost U.S. exports and align with domestic production goals, according to government officials. Meanwhile, Prime Minister Narendra Modi is set to visit the U.S. this week, potentially influencing trade dynamics.

Foreign Institutional Investors (FIIs) have sold Rs 17,129.5 crore worth of Indian equities so far in February.

Among sectoral indices, Nifty Auto, Energy, Media, Oil & Gas, and Realty were the worst hit, dropping 2-3 percent.

Hero MotoCorp, M&M, ITC, RIL, and Bharat Electronics were the worst-hit stocks on Nifty 50, falling 1-2 percent. In contrast, TCS, Tech Mahindra, Infosys, HCLTech, and Wipro emerged as the top gainers, rising nearly 1 percent each.

Ircon International shares fell nearly 8 percenr after the company's net profit declined 64.6 percent to Rs 86.59 crore in Q3 FY25 from Rs 244.64 crore in Q3 FY24. Sales dropped 10.8 percent to Rs 2,612.86 crore from Rs 2,929.54 crore during the same period.

Gopal Snacks shares fell 8 percent after its standalone net profit plunged 70 percent to Rs 5.3 crore in Q3, impacted by higher expenses. The company had posted a net profit of Rs 17.8 crore in the same quarter last year.

On the technical front, Prashanth Tapse, Senior VP (Research) at Mehta Equities, said, "Technically, strength will only be confirmed if Nifty crosses its 200-DMA at 24,046, while downside risks persist below 23,000."

Global markets presented a mixed bag. Wall Street's main indexes ended mixed on February 11 as gains in Coca-Cola and Apple offset losses in Tesla. Meanwhile, Asia-Pacific markets mostly rose today.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.