More Stories

Informist, Monday, Feb. 24, 2025

By Akshita Kumar

MUMBAI – Analysts expect benchmark indices to continue to fall Tuesday amid fears over the tariff policies of the Donald Trump-led administration in the US, outflows by foreign institutional investors, and expensive stock valuations despite the recent correction. Further, there is a big risk that earnings growth may disappoint for a prolonged period, especially after weaker-than-anticipated earnings growth reported in the December quarter.

Foreign institutional investors are moving to China and Hong Kong as valuations in those markets are relatively cheaper than India, Santosh Meena, head of research at Swastika Investmart, said. "(In India) we are in a short-term bear market and the valuations need to become attractive for FIIs to start investing in India again," he said.

FIIs have continued to sell Indian equities this month, but the pace of selling has come down. Foreign investors have net sold Indian equities worth INR 271.41 billion so far in February till Friday, which is lower than INR 780 billion worth of outflows in January, according to National Securities Depository Ltd.

Pharmaceutical, some specialty chemicals, and automobile sectors are expected to be affected the most by tariffs of the US, Sanjeev Hota, head of research at Sharekhan, said. "The magnitude of impact (of US tariffs) is uncertain, which is one of the main reasons impacting the market," Hota said. He expects the volatility in the market to continue until earnings recover.

Technical analysts have lowered their support levels after the Nifty 50 Monday breached its intraday support levels. The Nifty 50 closed at 22553.35 points, down 1.1%, and now technical analysts expect the index to fall more Tuesday and find support at 22400 this week. They expect the index to face resistance at 22800-23000 points. 

Several analysts are cautious about the valuations in the market, with Sharekhan's Hota saying that one should wait for more time before investing in small-caps and mid-caps. At the same time, outlook on large-caps was relatively positive. According to media reports, Citi upgraded Indian equities to 'overweight' from 'neutral' as they are seeing signs of recovery in terms of capital expenditure from the government, and amid hopes of an improvement in consumption after the tax relief announced in the Budget in February take effect. The brokerage expects the Nifty 50 to reach 26000 points by the end of this year, indicating a rise of around 15% from the current level.

Shares of information technology companies are expected to fall more Tuesday, but the same will depend on cues from the US market. Sentiment were weak Monday after IT stocks in the US fell last week amid worries that tariffs by Trump would lead to inflation and hurt the prospects of sharp cut in interest rates. On Monday, the Nifty IT index ended down 2.7%, falling for the fourth straight session to close at its lowest level in over six month at 39446.60 points.

Delayed growth recovery, the slowdown in urban demand, and higher prices of a few commodities have pushed fast-moving consumer goods stocks to correct 10-35% in the last five to six months, brokerage Anand Rathi said in a research report. Thus, valuations of many of these companies have turned attractive, the brokerage said. The value growth for FMCG companies accelerated to double digits in the last two quarters, boosted by recovery in the volume growth. The brokerage expects FMCG companies to report a better volume-led value growth in coming quarters. 

Global brokerages' views were mixed over the possible electric-vehicle policy, through which the government may provide relief to foreign companies, according to media reports. Brokerage HSBC Global Research expects that the new electric-vehicle policy, if implemented, will have a disadvantage for Indian domestic original equipment manufacturers against imported electric-vehicles. On the other hand, Nomura Global Markets Research expects the policy to expand the electric-vehicle market in India since Indian consumers will get more options at affordable prices. Higher volumes will support expansion of the electric-vehicle charging network in India, Nomura said.  End

Edited by Tanima Banerjee

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.