Indian equity markets tumbled on February 21 as the Sensex and Nifty were weighed down by auto and financial stocks. A sharp sell-off on Wall Street, fears of disruption from Trump's proposed tariffs, sticky U.S. inflation, and the Federal Reserve’s cautious stance on rate cuts continued to spook investors.
At close, the Sensex was down 424 points or 0.6 percent at 75,311, and the Nifty was down 117 points or 0.5 percent at 22,795. About 1,625 shares advanced, 2,169 shares declined, and 111 shares were unchanged. From their peak levels in September 2024, the Sensex has now dropped 12 percent, while the Nifty has lost 13 percent. The indexes are down for the week, with the Sensex slipping nearly 1 percent each.
"This is part of an ongoing correction that has been playing out for several months. The market has yet to establish a bottom on a higher timeframe, and there are no positive triggers to arrest this decline in the near future," said Rachana Vaidya, SEBI Registered Research Analyst at Rachanavaidya.in.
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"We are done with the Union Budget, and the RBI policy has also been announced. Additionally, global market cues have not been supportive. In fact, they have acted as a spoilsport, even for short-term relief rallies. Combining these macro factors with the prevailing technical weakness suggests that markets could move even lower in the coming sessions," she added.
Foreign institutional investors (FIIs) have offloaded Indian equities worth Rs 33,527 crore so far this month, as renewed interest in rebounding Chinese stocks prompts a shift in global allocations.
The broader market mirrored the weakness, with the BSE Midcap index slipping over 1 percent and the BSE Smallcap index down 0.4 percent. Midcap and smallcap stocks have now corrected 16 percent and 20 percent, respectively, from their record highs, as investors grow wary of stretched valuations and lacklustre earnings.
Sectoral indices painted a grim picture, with 12 out of 13 trading in the red. The Nifty Metal index was the lone gainer, up over 1 percent. The Nifty Auto index bore the brunt of the sell-off, tanking 2.5 percent following reports that the government may slash import duties on electric vehicles from 110 percent to 15 percent as part of a new EV policy, paving the way for Tesla’s entry into India. Mahindra & Mahindra, Tata Motors, and TVS Motors led the decline.
Financials and IT stocks also came under pressure, falling close to 1 percent as persistent foreign investor selling weighed on sentiment. Midcap IT stocks such as Coforge and Persistent Systems slumped 2-3 percent after global peer Endava slashed its revenue growth guidance for FY25 to 8.5-9 percent from the earlier projection of 10-11.5 percent.
On the Nifty 50, Adani Ports, BPCL, Tata Motors, Wipro, and M&M were the biggest laggards, dropping 2-6 percent. Meanwhile, HCLTech, Eicher Motors, L&T, Tata Steel, and Hindalco defied the broader market trend, gaining 1-2 percent.
Shares of JSW Energy climbed 6 percent, extending their winning streak to a fourth consecutive session after global brokerage Morgan Stanley reaffirmed its ‘overweight’ rating on the stock with a price target of Rs 545. The target implies a potential upside of 16.5 percent from the last close of Rs 468.
Shares of Religare Enterprises surged 18 percent after the Burman family secured majority control of the company and was officially designated as its promoter.
L&T Technology Services soared 4 percent after global brokerage firm Macquarie upgraded the IT stock to ‘Outperform’ from ‘Underperform,’ citing improved valuation and potential growth catalysts. The brokerage raised its target price to Rs 6,530 per share, implying a 33 percent upside from previous closing levels.
Vaidya noted that at the start of the week, Nifty futures had a key resistance level at 23,150 but failed to even approach it, instead rolling over from a lower high—a clear sign of market weakness.
"The last support level we mentioned on social media this morning was 22,900 on futures. Once that was breached early in the trading session, the market saw a sharp decline below 22,900. That was the threshold for short-term traders to go short. From there, we witnessed a nearly 200-point drop, bringing Nifty futures down to approximately 22,700-22,750," she explained.
"Looking ahead, the next visible support levels on the charts for Nifty futures are 22,700 in the extreme near term and 22,500 over multiple days. This view will remain valid as long as Nifty futures trade below the 23,150 resistance level, keeping the bias on the downside," she said.
For the medium term, Vaidya sees 21,800 as the next crucial support level. "I don’t see the market halting before that level," she concluded.
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