Sensex and Nifty Hit 8-Month Lows as Global Fears Mount
It was another rough day for Indian investors as the Sensex and Nifty extended their losing streak to a fifth consecutive session, plunging to eight-month lows on Saturday, February 24th. A wave of selling, triggered by a combination of global economic concerns and shifting investment patterns, sent the market into a tailspin.
Factors contributing to the market's dismal performance:
- US Economic Worries: Wall Street took a tumble overnight, fueled by anxieties about slowing consumer demand and potential new US trade tariffs. A report showing a 15-month low in US consumer sentiment, coupled with rising inflation expectations, added to the unease. These concerns are linked to proposed trade policies.
- Stagflation Fears: Experts are worried that the US, the world's largest economy, might be heading towards stagflation – a nasty combination of slow growth and rising prices. This is bad news for export-oriented sectors in India, especially the IT industry.
- Foreign Fund Outflows: Foreign Institutional Investors (FIIs) have been rapidly pulling money out of Indian equities. In February alone, they've net sold stocks worth a staggering ₹36,977 crore. Domestic investors (DIIs) have been buying, but not enough to offset the outflow.
- China's Comeback: The "Sell India, Buy China" trade is gaining traction. Chinese stocks have become increasingly attractive to investors, partly due to China's efforts to stabilize its economy through rate cuts, support for the property sector, and injecting liquidity.
- The tariffs: The fear of tariffs has triggered a sell.
Sensex and Nifty Performance:
The Sensex closed down 854 points (1.1%) at 74,456, while the Nifty fell 243 points (1.1%) to 22,552. Both indices have now dropped over 13% from their record highs in late September 2024. The number of declining shares on the NSE significantly outnumbered advancing ones (1,981 vs. 663), highlighting the broad-based nature of the sell-off.
Sectoral Performance
- IT Stocks Hammered: The Nifty IT index was the biggest loser, plummeting nearly 3%, with heavyweights Infosys and TCS taking a significant hit.
- Metal Stocks Slide: The Nifty Metal index, after a strong run, dropped over 2% due to weak global sentiment. Vedanta, Tata Steel, and Hindalco were among the major decliners.
- Auto Stocks Rebound: The Nifty Auto index managed a surprising recovery, bouncing back from intraday lows to close slightly higher. Concerns about potential competition from Tesla had initially weighed on the sector.
- FMCG Defies Trend: The Nifty FMCG index was a rare bright spot, gaining 0.4% thanks to strong performances from companies like Varun Beverages, United Spirits, and ITC.
Other Stock Movements:
- NTPC Green Energy continued its downward spiral, falling another 6% after the expiry of its shareholder lock-in period.
- InterGlobe Aviation (IndiGo) extended its winning streak, climbing to ₹4,543 per share, boosted by a positive outlook from Citi analysts.
- Healthcare Global Enterprises rose over 2% following news of a significant investment by private equity firm KKR.
The market is clearly in a volatile phase. While India's long-term growth story remains intact, short-term headwinds, both domestic and global, are creating significant uncertainty. Investors will be closely watching FII flows, global economic data, and any further developments regarding trade policies. The coming days will be crucial in determining whether this downturn is a temporary blip or the start of a more prolonged correction.
DISCLIMER: Prameya or Prameya News7 does not endorse the views or recommendations expressed by experts/brokerages in this article. These are solely their opinions. Readers are advised to consult with a qualified financial advisor before making any investment or trading choices.
