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The Indian stock market is currently navigating a turbulent period, characterized by a persistent losing streak and a growing sense of unease among investors. The market has been under pressure for three consecutive weeks, reaching its lowest levels since June 2024, signaling a potential shift towards a bear market. This downturn is largely attributed to escalating trade tariff concerns stemming from the United States, coupled with a generally unfavorable global economic outlook. Investors are keenly awaiting key market triggers in the first week of March to determine the future direction of the market. These triggers include monthly auto sales figures, potential tariff announcements by Donald Trump, fluctuations in the rupee-dollar exchange rate, the outflow of foreign funds, domestic and global macroeconomic data releases, and overall global market cues. These factors are expected to play a crucial role in shaping market sentiment and influencing investment decisions over the next five days. The recent performance of the domestic equity benchmarks, Sensex and Nifty 50, reflects this uncertainty. After a week-long consolidation phase, both indices experienced a sharp decline of approximately three percent, primarily driven by weak global cues. Concerns over the potential impact of US tariffs on global trade, coupled with persistent outflows of foreign funds, have contributed to a negative market sentiment from the outset. Although some heavyweight stocks attempted to mitigate the downside during the middle of the week, a significant selloff in the final trading session confirmed the prevailing bearish tone. The NSE benchmark recorded its longest monthly losing streak in the last 29 years, dating back to 1996. Nifty 50 and Sensex closed at their weekly lows of 22,124.70 and 73,198.10, respectively, extending their losses for the eighth consecutive session. The magnitude of the recent declines is also noteworthy. Sensex and Nifty suffered their biggest intraday drop of 2025 points and closed lower for the fifth consecutive month. The frontline indices shed six percent in February and are down 15-16 percent from their September peaks, indicating a significant correction in the market. The Nifty IT index, in particular, hit a six-month low, reflecting concerns about the outlook for the technology sector. Across the board, major sectors aligned with the broader market trend, posting losses. The IT, realty, and energy sectors emerged as the top underperformers, suggesting a widespread impact of the negative market sentiment.
The broader market, represented by the more domestically focused mid-cap index, has also confirmed a bear market, falling more than 20 percent from its September 24 record close. This decline is attributed to a combination of factors, including poor earnings reports, high valuations, concerns about US tariffs, and persistent foreign outflows. The impact of this market downturn on investors' wealth has been substantial. On Friday alone, investors' wealth plunged by ₹9 lakh crore, bringing the total wealth erosion for the week to ₹20 lakh crore. This significant loss of wealth has undoubtedly contributed to the prevailing negative sentiment in the market. Despite the current challenges, there are some positive signals emerging. According to Vinod Nair, Head of Research at Geojit Financial Services, India’s Q3 FY25 GDP data met expectations, with a slight upward revision to 6.5 percent for the fiscal year. The agriculture sector posted steady growth, indicating a likely improvement in the kharif crop, which could support rural consumption. This positive development could provide some much-needed support to the market in the coming months. However, Nair also cautioned that Indian stock market conditions are expected to remain weak in the near term, with a gradual recovery anticipated as earnings improve from Q1 FY26 and global trade policy uncertainties subside. This suggests that investors should brace themselves for continued volatility in the short term. Looking ahead to the coming week, the primary market is expected to remain subdued, with hardly any new initial public offerings (IPOs) or listings slated across the mainboard and small and medium enterprises (SME) segments. This lack of activity in the primary market could further dampen market sentiment. The week will be critical from both a domestic and technical perspective, as investors will closely monitor all domestic and global macroeconomic data releases, along with currency rates. These factors will provide crucial insights into the health of the Indian economy and the potential impact of global events on the stock market.
Several key triggers are expected to influence the stock markets in the coming week. Macroeconomic data releases will be closely watched, including high-frequency data such as auto sales and PMI figures. India’s Composite PMI output for February, scheduled for release on Wednesday, March 5, is of particular interest. Puneet Singhania, Director at Master Trust Group, forecasts this figure at 60.6 and believes it will be crucial for market movement. A PMI output figure better than expected would be a positive update for the Indian economy, while a lower-than-expected reading may be termed a bearish update. In terms of IPOs and listings, no new issues are scheduled to open in the mainboard segment. However, one new issue will open for subscription in the SME segment this week. Among listings, four new SMEs will debut on either BSE SME or NSE SME this week. The activity of foreign institutional investors (FIIs) will also be closely monitored. Institutional activity reflected net foreign institutional investors' (FII) outflows of ₹22,011 crore in the cash segment, while domestic institutional investors' (DII) inflows stood at ₹22,252 crore, offering some support to the market. Foreign portfolio investors (FPIs) continued to pull out funds from the Indian stock market in February, selling equities worth ₹34,574 crore. This persistent outflow of foreign funds is a major concern for the market. According to Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, FIIs invested ₹11,051 crore through the primary market. So, the net sales figure for 2025 up to February stands at ₹1,12,601 crore. He also noted that an important paradox in FII selling is that they are selling heavily in financial services—the sector that is doing well and has attractive valuations. He attributes this to high valuations in India compared to Chinese stocks, leading FIIs to move their investments to China. Vipul Bhowar, Senior Director - Listed Investments, Waterfield Advisors, adds that falling commodity prices and reduced consumer spending adversely impact corporate profits and diminish the appeal of Indian equities to foreign investors. As a result, FPI holdings in Indian equities have reached multi-year lows due to significant selling, and investors are likely to await signs of recovery before re-entering the market.
Global cues will also play a significant role in shaping market sentiment in the coming week. Key macroeconomic data releases, US Fed Chairman Jerome Powell's speech, and the impact of major tariffs by the US president will all be closely watched. Market sentiment will be shaped by initial jobless claims, unemployment data, and nonfarm payrolls. The US S&P Global Manufacturing PMI (February) data, scheduled for release on March 3, is estimated to be 51.6. UK S&P Global Manufacturing PMI (February) and China S&P Global Manufacturing PMI (February) will also be released in February, with forecasts of 46.4 and 50.6, respectively. The US Composite PMI released for February will also be of great importance. The forecasted value for US Composite PMI is 50.4. According to Puneet Singhania, the forecasted value for February could indicate a near-stagnation in the private sector, as the US Composite PMI came in at 52.7 in January. On March 6, the US initial jobless claims data will be released. The projection of 250K suggests a rising unemployment issue and is an important indicator for predicting economic conditions. Data on the US unemployment rate for February will be released on March 7. US Fed Chair Jerome Powell will speak on Friday to shed light on the present economic conditions and outlook. Finally, some corporate actions will also be relevant. Shares of Metro Brands, SBI Life Insurance, among others, will trade ex-dividend in the coming week, starting from Monday, March 3. A few stocks will also trade ex-split and ex-bonus this week. From a technical perspective, Nifty is approaching a crucial support zone of 21,800-22,000. A decisive break below this range could extend the decline toward the 21,000-21,200 zone, potentially pushing the index officially into a bear market. In conclusion, the Indian stock market is facing a challenging period marked by global uncertainties, FII outflows, and concerns about domestic economic conditions. Investors should remain cautious and closely monitor key market triggers to navigate the volatility and make informed investment decisions.