Synopsis
The Indian stock markets are currently consolidating due to global uncertainties. The Sensex and Nifty indices have experienced declines, while midcap and smallcap stocks have shown better performance. Experts anticipate a return of FIIs in the coming months, driven by strong domestic demand and digital transformation.Key Takeaways
- Indian stock markets are consolidating amidst global concerns.
- Sensex and Nifty indices dropped over half a percent.
- Midcap and smallcap indices outperformed.
- FIIs expected to return in 3-6 months.
- Investors are monitoring key economic indicators.
Mumbai, Feb 22 (NationPress) The Indian stock markets have entered a phase of consolidation this week, as the key indices Sensex and Nifty both fell by more than half a percent, influenced by weak global indicators and concerns surrounding trade wars.
Beginning the week on a positive note, the indices exhibited a degree of resilience during a range-bound trading session. Increased buying activity in pharmaceutical, metal, and energy stocks enabled them to recover from their longest losing streak in two years, which occurred on February 17.
Investor sentiment remained cautious, responding to renewed tariff threats from the US that prompted profit-taking in large-cap stocks.
In contrast, midcap and smallcap indices showed stronger performance, with select counters witnessing buying interest, resulting in gains of up to 2 percent for both indices by the week's end.
This market volatility arises at a time when worries over reciprocal tariffs and the overall stability of the global economy are impacting investor confidence.
According to Vinod Nair from Geojit Financial Services, “The announcement of reciprocal tariffs by US President Donald Trump has significantly impacted export-oriented sectors, especially the pharmaceutical industry, which has seen notable underperformance.”
Looking forward, market experts predict continued volatility in the upcoming holiday-shortened week due to the monthly expiry of derivatives contracts.
A potential consolidation or earnings-driven growth could lead to a reset in valuations, making Indian equities more appealing.
Foreign institutional investors (FIIs) are anticipated to return to India within the next 3 to 6 months, given that the long-term economic and macro factors are favorable, as stated by Vaibhav Porwal, Co-Founder of Dezerv.
“Strong domestic demand, digital transformation initiatives, and a push for infrastructure development are expected to be the long-term drivers for corporate earnings and sustained growth,” he added.
Additionally, investors are advised to monitor critical economic data, such as the US Core PCE Price Index and India's GDP figures, for further insights.
On Friday, the Indian stock markets closed lower, with the Sensex falling by 424.90 points to close at 75,311.06, while the Nifty decreased by 117.25 points to settle at 22,795.90.
The broader markets remained subdued as investors maintained a cautious approach amid ongoing global uncertainties.
