The Indian stock market is currently navigating a particularly turbulent period, with small and mid-sized companies bearing the brunt of the downturn. Sources indicate these stocks have seen significant declines this year, with reports showing drops of 14% and 19.2% respectively. This comes as part of a broader market slump, with the Nifty50 experiencing its most prolonged monthly losing streak in nearly three decades.
According to market observers, the Nifty50 has now closed lower for five consecutive monthly futures and options (F&O) expiry cycles. Financial analysts confirm this is the index's worst such streak since 1996. The last instance of such a sustained decline occurred between July and November of that year, with an even longer eight-month slide recorded between September 1994 and April 1995.
The current sell-off, which gained momentum in recent months, is attributed to a combination of factors. Financial reports point to underwhelming corporate earnings, continued selling pressure from foreign investors, and a general sense of economic unease. February alone saw the Nifty50 and Sensex drop roughly 4%, extending their total decline from late September 2024 peaks to 14% and 13.2%, respectively.
However, not all outlooks are entirely negative. In a contrasting viewpoint, Citigroup recently upgraded Indian equities, moving them from "Neutral" to "Overweight." Their rationale includes the belief that current valuations are becoming more reasonable, and that India has the potential to perform well compared to other markets, especially if global trade tensions flare up again.
Recent trading sessions reflect the overall market hesitancy. The February 27 session saw Indian equity benchmarks close nearly flat. Gains in financial stocks, spurred by the Reserve Bank of India's move to relax lending rules for smaller borrowers and non-bank lenders, were counterbalanced by losses in the auto sector. Market sentiment was further impacted by renewed concerns over tariffs, as U.S. President Donald Trump suggested potential delays in tariffs on Mexican and Canadian imports, while also proposing reciprocal tariffs on European goods.
The trading session concluded with the Sensex down slightly by 37 points, settling at 74,564, while the Nifty50 decreased by 38 points (0.2%) to close at 22,509. Market breadth, a measure of overall market participation, leaned heavily negative, with significantly more stocks declining than advancing on the National Stock Exchange (NSE). With both global markets and India's own economic landscape facing headwinds, financial professionals suggest that investors should be prepared for a potentially extended period of uncertainty.
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.
