Weekly Market Round-Up: Market Sentiment Turns Bearish Amid Global Uncertainty

Markets witness heavy losses, mid and small-cap stocks underperform, while global uncertainties and economic factors drive investor sentiment.

February 15, 2025: The Nifty-50 Index and Sensex each saw a 3% decline, reflecting a renewed risk-off sentiment in the markets. The broader indices witnessed deeper cuts, with the mid-cap index losing 8.5% and the small-cap index dropping 10.5%, sharply underperforming large-caps.

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The market remains cautious due to three major downside risks:

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1. Tariffs imposed by the US on India, impacting trade relations.
2. Uncertain domestic growth, leading to concerns about economic recovery.
3. Tepid management commentary from the Q3FY25 earnings season, weighing on investor sentiment.

All sectoral indices ended in the red, with some facing steep losses:

• Realty (-10%)
• Auto (-6.7%)
• Capital Goods (-6.3%)
• Power (-7.3%)
• Metal (-4.9%)

Other sectors recorded losses in the range of 2-5%.

Despite the bearish trend, some stocks bucked the trend and posted gains:

• Bharti Airtel (+2.3%)
• Britannia (+1.4%)
• Bajaj Finserv (+2.2%)

On the other hand, the biggest losers were:

• Eicher Motors (-12.3%)
• Hero Motocorp (-9.6%)
• BEL (-9.4%)

Foreign Portfolio Investors (FPIs) remained net sellers, while Domestic Institutional Investors (DIIs) emerged as net buyers over the last five trading sessions.

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Key Economic Developments Driving Markets

• The RBI cut interest rates by 25 bps, aiming to stimulate growth.
• January CPI inflation softened to 4.3% (vs. 5.2% in December), providing some relief.
• IIP growth for December moderated to 3.2% (compared to 5.2% in November), indicating slowing industrial momentum.

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Global Market Trends

• In the US, all major indices are set to end the week on a positive note. However, investor focus remains on the upcoming Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge.
• President Donald Trump’s threat of reciprocal tariffs could impact $600 billion worth of goods imported from the EU in 2024, raising concerns over a potential trade war.
• European stock markets hit record highs earlier this week, driven by corporate earnings and economic optimism.
• In Asia, India and the US have pledged to more than double bilateral trade to $500 billion by 2030, signaling strengthening economic ties despite trade tensions.

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Market Outlook

While the market sentiment remains cautious, factors such as rate cuts, cooling inflation, and global trade discussions could play a crucial role in determining the next market direction. Investors should closely monitor global economic trends, central bank policies, and corporate earnings for further cues.