India’s benchmark indices, Sensex and Nifty, closed flat on February 18 as investors remained cautious ahead of the FOMC minutes release on February 19. A hawkish Fed stance could dampen hopes for rate cuts in 2025, potentially accelerating foreign outflows from Indian markets.
Markets opened on a subdued note and remained under pressure throughout the session, weighed down by weak corporate earnings and persistent foreign selling. FMCG and auto stocks dragged the Nifty lower, while the broader market faced steeper losses—BSE Midcap fell nearly 1 percent, and BSE Smallcap tumbled almost 2 percent on valuation concerns.
At close, the Sensex was down 29 points or 0.04 percent at 75,967, and the Nifty was down 14 points or 0.06 percent at 22,945. About 993 shares advanced, 2,804 shares declined, and 101 shares were unchanged.
Astha Jain, Senior Research Analyst at Hem Securities, noted that the markets have now shifted focus to global developments, as earnings season is done and dusted.
"The market movement right now is largely driven by global developments. The result season is over, and whatever impact earnings had—positive or negative—has already been factored in. There are no more surprises from corporate results. At this point, market movements are primarily influenced by global factors."
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted a critical risk—capital outflows from India to the U.S. as Wall Street continues its record run.
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A key development emerged from China, where authorities signalled a new approach to government-business relations. President Xi Jinping emphasized the need for a “clean relationship” between government and business, a move that could boost sentiment in China’s struggling economy—particularly as it reels from a real estate crisis.
"This is regarded as a favourable development for reviving the Chinese economy, which is struggling now from the fall out of the crisis in the real estate sector," Vijayakumar explained. "If the Chinese government’s new initiatives attract positive responses from the FIIs, that means more bad news for Indian markets."
Meanwhile, foreign institutional investors (FIIs) continue to flee Indian markets, offloading Rs 33,121 crore in February alone.
The pain is most evident in the broader market—small-cap stocks have officially entered a bear market, while mid-caps are still down 18 percent from their peaks.
Ajit Mishra, SVP of Research at Religare Broking, cautioned that while a short-term bounce in small- and mid-caps is possible due to oversold conditions, a clear bottom has yet to form.
"Investors are looking at stocks that have shown earnings visibility and growth prospects post-results. Banking stocks, in particular, are seeing interest due to strong earnings visibility and expectations of a liquidity boost and possible rate cuts," he said.
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Bharat Electronics, Trent, IndusInd Bank, Tata Motors, and M&M led the losers on the Nifty 50, dropping 2-3 percent. In contrast, Tech Mahindra, Wipro, Apollo Hospitals, NTPC, and HDFC Bank emerged as the top gainers, rising 0.5-1.5 percent.
Seven of the 13 major sectoral indices closed in the red. The Nifty IT index emerged as the top performer, gaining almost a percent, fueled by Persistent Systems and Tech Mahindra.
Shares of Persistent Systems surged 3 percent, snapping a six-day losing streak, after JP Morgan gave it an ‘overweight’ rating, urging investors to “buy the dip.” The brokerage set a target price of ₹7,200 per share, implying a 30 percent upside from the last closing price.
Meanwhile, Zen Technologies remained under intense selling pressure for a third straight session after reporting a sharp sequential decline in Q3 earnings. The stock plunged 10 percent, extending its three-day rout to 33 percent.
Godfrey Phillips shares surged 5 percent, marking their third consecutive session of gains. The sharp uptrend follows the company’s strong December quarter earnings, with net profit soaring 48.7 percent to Rs 315.9 crore, compared to Rs 212.4 crore in the same period last year.
Jain sees 22,800–22,750 as critical support levels for the Nifty 50.
"If these levels hold, we could see an upside move. However, the next couple of days will be crucial in determining whether the market respects these support levels or breaks below them."
On the bright side, geopolitical de-escalation between Russia and Ukraine, cooling oil prices, and the RBI's monetary policy stance could serve as tailwinds.
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