Sensex plunges 650 pts, Nifty below 22,750: Key factors behind markets staring at longest losing streak in 6 years

Sensex, Nifty declined for the 9th straight session in early trade on February 17.

Sensex and Nifty extended their losses in Monday's trading session as the headline indices slumped further amid sustained foreign fund outflows and concerns over weak corporate earnings.

The BSE Sensex fell 644.45 points or 0.84 percent to 75,294.76, while the NSE Nifty slipped 203.8 points or 0.88 percent to 22,725.45. In early trade, the indices had shown signs of weakness, with the Sensex opening 297.8 points lower at 75,641.41 and the Nifty shedding 119.35 points to 22,809.90.

Major laggards in the Sensex pack included Mahindra & Mahindra, Tata Steel, Infosys, Tech Mahindra, TCS and ICICI Bank.

In the past eight trading days, the Sensex has tumbled 2,644.6 points or 3.36 per cent, while the Nifty has shed 810 points or 3.41 per cent. The markets witnessed a nine-session losing streak from April 30 to May 13 in 2019, declining by 5.16 percent. The latest downturn has now extended to eight consecutive sessions, with early trade remaining in the red, which could possible led to longest losing streak in six years.

Key factors weighing on market sentiment:

1) Weak Q3 earnings: Investor sentiment remains subdued as corporate earnings fail to meet expectations. Earnings growth in the third quarter has been modest at around 7 percent, raising concerns over high valuations. "The slowdown in corporate earnings is the key reason behind the relentless FII selling, which has dragged the market lower. The appreciating dollar has further compounded the issue," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

"We expect single-digit (percent) returns for Nifty in 2025 and small and midcaps to see negative returns," Amish Shah, research analyst at BofA Securities India told Reuters.

Slowing corporate and economic growth would make it hard to justify valuation expansion for Nifty, while midcaps and smallcaps could see a further contraction due to high valuations, Shah added.

2) Rupee depreciation: The Indian rupee depreciated by 5 paise to 86.76 against the US dollar on Monday, weighed down by foreign fund outflows and weak domestic equities. The currency is hovering near its all-time low, making imports costlier and adding to inflationary pressures.

3) Global trade concerns: Uncertainty over US trade policy has added to market volatility. Investors are closely tracking US President Donald Trump's tariff decisions, which have fuelled concerns over global trade disruptions. "Volatility is expected to persist until there is clarity on tariffs and a recovery in corporate earnings," said Vinod Nair, Head of Research at Geojit Financial Services.

4) Persistent FII selling: Foreign Portfolio Investors (FPIs) offloaded equities worth Rs 4,294.69 crore on Friday, taking the total outflow in 2025 so far to Rs 99,299 crore, nearing the Rs 1 lakh crore mark, according to depository data. In the first two weeks of February alone, FPIs pulled out Rs 21,272 crore, largely driven by concerns over US tariffs and global economic uncertainties. This followed a net outflow of Rs 78,027 crore in January.

Technical outlook:

Market experts caution that further downside is likely. Ajit Mishra, SVP-Research at Religare Broking Ltd., pointed out that multiple retests of the January low at 22,800 have weakened its support, increasing the risk of further declines. "The next key support levels for Nifty are in the 22,100-22,500 range. On the upside, immediate resistance is seen at the 20-day exponential moving average (DEMA) of 23,350, followed by 23,600," he said.

Despite the broader weakness, analysts note that banking and IT stocks have shown relative resilience. Investors are advised to remain cautious and avoid bottom fishing in the current market scenario, given the sustained pressure on key indices.

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