 "Stock Markets Crash: Nifty levels; strategy after Q3 results, Trump tariffs")
Stock Market Crash, Stock Markets Today: India stock markets crashed again on Monday, February 17, 2025. The BSE Sensex declined 644 points intraday to hit a low of 75,295. The NSE Nifty50, on the other hand, tumbled 204 points to hit a low of 22,725.
M&M, ICICI Bank, Bharat Electronics, Axis Bank, Wipro, Bharti Airtel, HDFC Life, Hero MotoCorp, Infosys, Tata Steel, and L&T were some of the biggest large-cap losers on the benchmarks -- Sensex, Nifty -- today.
In the broader markets, the Nifty SmallCap index slipped 363 points or 2.3 per cent, and the Nifty MidCap index fell 1,151 points or 2.3 per cent. Aegis Logistics, Triveni Turbine, Tanla Platforms, Signature Global, Radico Khaitan, Titagarh Rail Systems, Garden Reach Shipbuilders, RVNL, Supreme Industries, Policybazaar, Mazagondock Shipbuilders, Bharat Dynamics, Hindustan Zinc, and Godrej Properties were among the top mid-cap, and small-cap loser stocks.
Why are Indian stock markets falling today?
According to analysts, foreign investors have been dumping India stocks amid earnings growth concerns, expensive valuation in select pockets of stock markets, and amid nervousness around reciprocal tariffs by US President Donald Trump. Besides, Trump’s policies, which may prove to be inflationary, may turn global central banks, including the US Federal Reserve, hawkish.
Since October 2024, foreign institutional investors (FIIs) have net sold India stocks worth Rs 2.94 trillion. Of this, Rs 1.16 trillion was sold in January and February (till date) 2025.
Sensex, Nifty Outlook: Will stock markets fall more?
According to analysts at JM Financial Technical and Alternative Research, the Nifty index has, typically, never closed in the negative territory for eight or more consecutive sessions. Last Friday, February 14, was the index’s eighth session of decline.
"Given the historical analysis, Nifty tends to bounce back in the near-term after the occurrence of such event. Thus, we expect limited downsides in the Nifty here on," it said in a note.
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Nifty's immediate resistance is placed at 23,810, above which the bearish formation of ‘Lower Top-Lower Bottom’ gets negated. Immediate support is placed at 22,500, followed by 21,800.
JM Financial Research said, the Nifty has, historically, generated average return (on daily closing high basis) of 5.4 per cent in one-month period following the eight sessions of declines. The median return stands at 5.8 per cent.
Further, the three-month period, following such declines, has seen average return on closing high basis of 8.9 per cent.
US Reciprocal tariffs: India Impact
Donald Trump, last week, signed a memorandum on a “Fair and Reciprocal Plan”, which allows to impose a reciprocal tax on trading partner countries that follow “unfair trading practices”.
However, what is worrying investors is that the US has decided to impose reciprocal tariffs not only on those countries that levy pure “tariffs” but also on those countries which impost “non-tariff barriers”, including value added taxes, deviations of exchange rates from market value, unfair limitations on market access, and non-tariff barriers.
This, analysts said, has increased the likelihood of the reciprocal tax being imposed across a broader swath of emerging and developed Asian economies.
Meanwhile, a 2024 USTR report lists China, India, Indonesia, the Philippines and Thailand as having
higher non-tariff barriers.
India stock markets: Strategy after Q3 results
According to analysts, the Nifty50 index recorded a net profit growth of 4 per cent during the first nine months of the current financial year (9MFY25), following a period of over 20 per cent CAGR during FY20-24).
For the quarter ending December 2024 (Q3FY25), the 50-share index delivered a 5 per cent year-on-year (Y-o-Y) profit growth, with the index reporting a single-digit PAT growth for the third successive quarter since the pandemic (June 2020).
An analysis by Motilal Oswal Financial Services shows that the earnings upgrade-to-downgrade ratio turned weaker for FY26 as 37 companies’ earnings were upgraded by more than 3 per cent in Q3FY25, while 137 companies’ earnings were downgraded by more than 3 per cent.
“The earnings upgrade/downgrade ratio of 0.3x was the worst since Q1FY21. Of the 292 companies under coverage, 81 exceeded our profit estimates, while 129 posted a miss, and 82 were in line,” the brokerage said.
The expectations for FY26 corporate earnings are still somewhat elevated, given the underlying macro-micro backdrop, and are thus ripe for further downgrades.
“The recent correction in broader markets factors into some of the potential disappointments in earnings ahead. That said, the valuations for mid and small-caps are still expensive vis-à-vis their history as well as vs. Nifty-50. Thus, we continue to remain biased toward large-caps,” Motilal Oswal Financial Services said.
It is ‘Overweight’ on Consumption, BFSI, IT, Industrials, Healthcare, and Real Estate, and is ‘Underweight’ on Oil & Gas, Cement, Automobiles, and Metals.
Those at Emkay Global said the markets will remain volatile through Q1CY25, and sharp sell-offs (like the current one) could keep recurring.
“We expect markets to stabilise from the next quarter (Q1FY26) as worries around Trump tariffs would have receded, earnings downgrades would be done, and recovery in discretionary consumption demand would become visible,” it said.
It has retained its December, 2025, Nifty target at 25,000, and believes the market is a “compelling buy” at 22,500 Nifty. It is ‘Overweight’ on discretionary consumption, healthcare, and telecom, and ‘Underweight’ on financials, materials, and staples.