February has come to an end on a rather disappointing note. The Sensex, Nifty plunged to June 2024 lows and the Nifty closed below 22,200 for the first time since June 4, 2024. This is the first time since Covid, the Nifty clocked fifth consecutive month of loss on the trot. The Nifty ended down 2% for the week. The Sensex too closed near 9-month lows at 73,198. For the week the Benchmark 30-stock Index ended down almost 3%. Both the Sensex, Nifty are around 4% away from their 52-week lows.
The carnage was deeper across the broader markets. The BSE Midcap index slumped 2.6% and the Smallcap index dropped 3%. For the week, BSE Smallcap is down 6% while the BSE Midcap Index is down over 5%.
Big FIIs outflow
FIIs have net sold Rs 11,639 crore worth equities in Indian markets today, as per provisional data.This is the largest single day outflow after November 28, 2024. With this the total outflows for February is well over Rs 50,000 crore and so far in 2025, FIIs have sold around Rs 1.4 lakh crore so far.
“While the trend of market decline continues unabated, the larger than expected fall has been caused due to uncertainties surrounding the actual impact of the countervailing tariffs imposed by the US, and similar walls erected by other countries including China. What has caused much of consternation is the possibility of China devaluing its currency in response to the tariffs to sustain its trade competitiveness. However, the last time around currency devaluation led to investment outflows from China. The move may have consequences for other regional currencies as well like Taiwan and South Korea, though the Rupee may be much less affected,” said Dr Joseph Thomas, Head of Research, Emkay Wealth Management.
The broad-based selling meant that almost every sectoral index ended in the red and the rout was maximum in IT and Auto sectors followed by PSU Banks, media, and telecom stocks. The Nifty IT index suffered the most, declining over 4%, followed by the Nifty Auto and Nifty Media indices, each down more than 3%. Consumer Durables also took a hit, slipping 3% as market sentiment remained weak.
“The national market experienced a sharp decline amid heightened bearish sentiment largely influenced by weak global cues. The decline was largely triggered on fear of the implementation of 25% tariff on U.S. imports from Canada and Mexico, set to take effect next week, along with an additional 10% tariff on Chinese goods. Adding to market jitters, the potential imposition of tariffs on the European Union has further fuelled uncertainty. As investors navigate this volatility, all eyes are on the domestic Q3 GDP data, which could provide vital insights into the economic recovery trajectory and influence market direction,” Vinod Nair, Head of Research, Geojit Financial Services.
Major indices near key lows
Today’s selling pressure has pulled the Sensex down 15% from its all-time high of 85,978 and the Nifty nearly 16% from its peak of 26,277 reached in September. Both indices are now just 4% away from their respective 52-week lows, that is, Sensex at 70,234.43 and Nifty at 21,281.45.
Amol Athawale, VP-Technical Research, Kotak Securities, “We view the current market condition as weak but oversold, hence the strong possibility of a pullback rally from the current levels is not ruled out. For short-term traders, 22,200/73500 would be the key level to watch out. Below this, the market could slip to 22,000-21,800/73000-72500. On the flip side, if the index sustain above 22,200/73500, sentiment could change. Above 22,200/73500, we may see a quick pullback rally up to 22300/74000, with further upside potential that could lift the market up to 22500/74500.”
Five-Month Losing Streak for Nifty
As the month of February wrapped, it is on track to be the fifth consecutive month of decline for both Sensex and Nifty. For the Nifty 50, this is the first five-month slump since 1996.Several factors are contributing to the sustained downtrend in the markets which include uncertainty over GDP data, global market concerns, sell in the IT stocks.
Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates highlighted that, “Technically, Nifty breached the 22,500 support with a gap-down opening and formed a bearish Marubozu candle, indicating weakness. As long as Nifty remains below 22,500, the bearish momentum is likely to persist, with 22,000 acting as immediate support, followed by 21,850 where the 100-Weekly Simple Moving Average (100-WSMA) is placed. Thus, traders are advised to follow sell on rise strategy.”