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Informist, Monday, Mar. 17, 2025

By Gopika Balasubramanium

MUMBAI – The Indian equity market took a breather from the recent fall and ended higher on Monday, led by gains in large-cap financial services, pharmaceutical, and automobile stocks. The rise came after the US Senate prevented the government's shutdown Friday by passing a funding bill and also because of no tariff shocks from the US. The Indian indices, however, underperformed most global peers, including those in the US, Asia, and Europe.

Valuations of large-cap stocks seem to be comfortable now, while those of mid-cap and small-cap stocks are still expensive, Ashutosh Mishra, head of institutional equities at Ashika Stock Broking, said. Mishra also said that it is difficult to see when Indian equities would stop seeing foreign capital outflows. The steep correction in the domestic market has helped the market to be resilient amid recent global volatility and it is expected to remain positive this week, he said. US Federal Reserve Chairperson Jerome Powell's commentary after the monetary policy meeting Wednesday and geopolitical developments such as Ukraine-Russia ceasefire talks will be closely watched by market participants, Mishra said. 

Benchmark indices rose sharply Monday, but then came off highs and were steady in the second half of the session. The Nifty 50 closed above 22500 for the first time in five sessions and ended at 22508.75 points, up 111.55 points or 0.5%. The BSE Sensex closed at 74169.95 points, up 341.04 points or 0.5%, snapping a five-day losing run.

Broader market indices outperformed benchmark gauges. "While large-cap stocks have seen a meaningful correction from their highs, mid-and small-cap stocks continue to trade at elevated valuations relative to historical norms and their large-cap counterparts", Mishra said. Historically, during weak market cycles, mid- and small-cap indices trade at a 10-20% discount to large caps, he said. Additionally, earnings downgrades remain a risk, which could exert further downside pressure on these stocks, he said. 

That said, certain mid-cap and small-cap stocks have now entered a fair value zone, but a bottom-up approach would be more prudent at this stage rather than taking a broad sectoral call, Mishra said. More clarity on the outlook should emerge after assessing the impact of the tariff war by mid-April, he said.

Last week, a sell-off across global markets was triggered after US President Donald Trump shrugged off reports of a likely recession in the US. Trump's tariff threats and retaliatory measures from its trading partners, including Mexico, Canada, and China have been raising worries of a full-fledged trade war and a potential spike in US inflation. However, in India, the sentiment improved amid ease in the quantum of selling by foreign investors, analysts said. 

Data released on Monday showed India's WPI inflation rose slightly to 2.38% in February from 2.31% a month ago

even as wholesale food prices continued to decline. The data was in line with the projected 2.4% in an Informist poll. "Outlook on food inflation has brightened. Encouraging prospects for the agricultural production, arrival of fresh Rabi harvest and comfortable reservoir levels are positives for food inflation," Rajani Sinha, chief economist at CareEdge Ratings said in a note. 

On Monday, shares of non-banking financial companies and private banks such as SBI Life Insurance, Bajaj Finserv, ICICI Bank, Axis Bank, and Bajaj Finance gained the most and ended nearly 2-4% higher. Major worries in the financial sector regarding the stress in the microfinance segment are slowly easing and these companies have made adequate provisions in the last two quarters, indicating that they will show strength in the near term, analysts said. Further, the concerns about liquidity deficit in the banking system have also reduced with the Reserve Bank of India announcing measures to inject durable liquidity, they said. 

Among other top-gaining sectors were pharmaceuticals with the Nifty Pharma closing 1.6% higher. Shares of large-cap pharmaceutical companies such as Dr. Reddy's Laboratories closed nearly 4% higher at INR 1,150.70 as the top gainer in the Nifty 50. Amid the ongoing global tariff woes, analysts said that a 25% tariff on pharmaceutical imports would not likely benefit the US, as it relies on India for over 45% of generic drugs. A fall in revenues of Indian pharma companies due to tariffs is unlikely, though there could be a slight impact, analysts said.

Shares of automobile companies also rose Monday, with Mahindra & Mahindra ending a little over 2%. Shares of Maruti Suzuki India recovered from day's losses and closed 0.4% higher after the company said it will increase the prices of its cars by up to 4% from April due to the rise in costs and operational expenses. Tata Motors also announed a price hike of up to 2% for its commerical vehicles, its stock closed nearly 1% higher. 

Among individual stocks, Muthoot Finance closed over 4% higher as the top gainer in the Nifty 200 after the company said its gold loan assets under management crossed INR 1 trillion on Thursday. Shares of KEC International ended nearly 7% higher after the company said it got new orders worth INR 12.67 billion. 

On the other hand, Tube Investments of India closed 3% lower, snapping a five-day gaining streak. Shares of Mastek closed over 6% lower, falling for the fifth session. The company said that its shareholders approved the re-appointment of Umang Nahata as the chief executive officer and whole-time director of the company for three years. 

* Of the Nifty 50 stocks, 32 rose and 18 fell

* Of the Sensex stocks, 19 rose, 10 fell, and 1 was unchanged

* On the NSE, 1,134 stocks rose, 1,781 fell, and 67 were unchanged

* On the BSE, 1,605 stocks rose, 2,507 fell, and 129 were unchanged

* Nifty Pharma: up 1.6%; Nifty Healthcare: up 1.5%; Nifty Media: down 0.7%

BSE                                             NSE

Sensex: 74169.95, up 341.04 points or 0.5%      Nifty 50: 22508.75, up 111.55 points or 0.5%

End

Edited by Saji George Titus

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