Market Pulse | 14th February, 2025

MARKET OVERVIEW

Globally, U.S. dollar weakened as tariff fears eased, and gold dipped but remained on track for a seventh weekly gain. China’s bank lending hit a record high, and the pound rose to a 2025 peak. India's wholesale inflation held steady at 2.31% in January, while the rupee saw its strongest weekly gain in 19 months, supported by RBI intervention. India’s market cap dropped below $4 trillion, with Sensex and Nifty falling 3% for the week, amid rising foreign outflows. Smallcap fund inflows surged 22.6%, while midcap funds hit an all-time high. India's market capitalisation has dropped below the $4-trillion mark for the first time in over 14 months. Sensex and Nifty fell 3% each for the week ended February 14. Foreign outflows have surged, exceeding $10 billion so far this year, with no signs of easing. In January, smallcap fund inflows surged 22.6% to a record Rs 5,720.87 crore, while midcap funds saw a slight increase to an all-time high of Rs 5,147.87 crore.

On February 14, pharma stocks dropped on US tariff concerns, while nuclear energy, telecom, and realty shares also fell. Metal stocks rose on potential safeguard duties, and the Nifty Realty Index saw a 20% YTD decline. Prudential has hired Citigroup to manage a potential $1 billion IPO for its Indian unit, ICICI Prudential Asset Management. Meanwhile, Tata Steel plans to raise ?3,000 crore through a private placement of non-convertible debentures. Amid the current Q3 results, IIFL Finance shares dropped 6% to a 10-month low as Q3 profit plummeted 85%, impacted by high credit costs. Natco Pharma fell 10%, extending a 30% decline in two days due to weak earnings. Meanwhile, HAL posted a 14% profit rise, driven by strong fighter jet demand, while HCC saw a 10% drop, hitting a 52-week low after reporting a Q3 loss.

ECONOMIC HIGHLIGHTS

INDIA

• India's January wholesale inflation steady at 2.31% y/y: ?India's wholesale inflation??in January remained steady at 2.31% year-on-year, from 2.37% in December, government data showed on Friday, on moderation in food and fuel prices. India headline retail inflation slowed to a?five-month low?in January as food price inflation eased raising hopes of another interest rate cut in the South Asian economy.
• Heavy RBI intervention helps rupee log best week in 19 months: The Indian rupee logged its biggest weekly rise against the dollar in seven months, lifted by the central bank's heavy intervention in the foreign exchange market and kept speculators betting against the currency at bay. The rupee ended at 86.8225 per U.S. dollar, up 0.1% compared to 86.8975 in the previous session. However, for the week, the rupee rose 0.7%, the most since mid-July 2023.

GLOBAL HIGHLIGHTS

• Dollar drifts near multi-week low as tariff fears ease: The U.S. dollar stabilised around a near three-week trough on Friday as traders took solace that Washington's reciprocal tariffs were not immediately imposed, while a U.S. producer price report soothed inflation concerns. The dollar rallied 7% against a basket of currencies last year, as investors prepared for Trump's tariffs that threatened to fire up inflation, among other things.The euro and the pound, which are in the firing line for reciprocal tariffs, have risen 2% and 3%, respectively, since Trump's inauguration.
• Gold dips on profit-taking, still eyes seventh weekly gain: Gold prices fell over 1% on Friday due to profit-taking, although they remained poised for their seventh straight weekly rise, driven by fears of a global trade war in the wake of U.S. President Donald Trump's push for reciprocal tariffs. Spot gold fell 1.6% to $2,882.99 an ounce, but remained on track for a weekly gain of 0.8%. Bullion hit a record peak of $2,942.70 on Tuesday.

• China January bank lending hits record high on policy stimulus: New bank loans in China surged more than expected to a record high in January as the central bank moved to shore up a patchy economic recovery, reinforcing expectations for more stimulus in coming months as U.S. tariffs threaten to pile more pressure on the economy. Chinese banks extended 5.13 trillion yuan ($706.40 billion) in new yuan loans in January, more than quadrupling the December figure, data from the People's Bank of China showed on Friday, beating analysts' forecasts.
• Pound Climbs to 2025 High After Worst Start to Year Among Peers: The pound climbed to its highest level this year against the dollar as traders covered short positions built up during a selloff in January. The UK currency rose 0.2% to 1.2596, a level last seen on Dec. 30. It has gained more than 4% in the past month, recovering from a tumble to $1.21 in January. It was little changed against the euro. Most major currencies strengthened against the dollar on Friday after US President Donald Trump’s latest announcement on trade tariffs fueled optimism that they will take longer than expected to implement. Most in the market are betting that the UK won’t be targeted at all.

MARKET HIGHLIGHTS

Nifty, Sensex lower for eighth session, longest streak since February 2023:

• Sensex and Nifty fell for the eighth session for the first time in two years on February 14, as fears of relentless FII selling and weak Q3 earnings overshadowed any optimism sparked by easing Russia-Ukraine tensions, a delay in U.S. tariff impositions until April, positive U.S. producer data, and hopes of tariff discussions between Indian Prime Minister Narendra Modi and U.S. President Donald Trump.
• Investors remained cautious about the implications of reciprocal U.S. tariffs, despite Modi's offer to discuss easing tariffs, buying more U.S. oil and gas, combat aircraft, and concessions. This followed his meeting with Trump at the White House. Meanwhile, Trump is planning reciprocal tariffs on every country taxing U.S. imports, fuelling fears of a global trade war, although the imposition of these duties is likely to be delayed.
• Foreign outflows have surged, exceeding $10 billion so far this year, with no signs of easing. Though domestic inflows have provided some support, they have been insufficient to counter the broad-based decline in share prices that has dragged the country’s market capitalisation to an eight-month low. The market capitalisation of BSE-listed companies dropped below Rs 400 lakh crore for the first time since June 2024.
• Sensex and Nifty fell 3% each for the week ended February 14. Nifty is currently 13% below its all-time high, while Sensex has declined 12% from its peak. The Smallcap index is down around 21% from its December record high, while midcaps are 19.5% below their peak closing level in September.
• Indian shares fall as US tariff worries persist:India's benchmark indexes fell on Friday as investors fretted over the implications of U.S. President Donald Trump's plans to impose reciprocal tariffs, which analysts said could hurt the country the most among its Asian peers.Indian Prime Minister Narendra Modi met Trump on Thursday and offered to talk about easing tariffs, buying more U.S. oil and gas, combat aircraft and trade concessions. However, that did little to calm markets back home. The Nifty 50 lost 0.44% to 22,929.25 while the BSE Sensex fell 0.26% to 75,939.21.
• India’s m-cap falls below $4 trillion, hits over 14-month low: India's market capitalization has dropped below the $4-trillion mark for the first time in over 14 months, driven by a weakening rupee and a declining stock market.India’s total market cap now stands at $3.99 trillion—its lowest since December 4, 2023. The country, home to the world’s fifth-largest stock market, has recorded the steepest market capitalisation decline globally in 2025, plunging by 18.33%.
• Investors double down on riskier bets: Inflows into smallcap, midcap funds hit all-time high: Ignoring warnings of smallcap and midcap stocks being overvalued, mutual fund investors continued to pile into these categories, as overall equity fund inflows hovered near the Rs 40,000-crore level in January. In the equity fund category, inflows into smallcap funds jumped 22.6% at Rs 5,720.87 crore, a record high, in January. Midcap funds saw a marginal rise to Rs 5,147.87 crore, which again?was an all-time high. Net investment in largecap funds surged 52.3% to Rs 3,063.33 crore, which is the second-highest level.
• Kotak Mahindra Bank shares hit fresh 52-week high as brokerages cheer RBI's digital nod: Shares of Kotak Mahindra Bank gained over 2% to hit fresh 52-week high of Rs 1,986 apiece on February 13 after the Reserve Bank of India lifted curbs on its digital banking operations.?Nearly 10 months after the embargo was imposed, the bank can once again issue new credit cards and onboard customers via its website and mobile app.?Brokerages responded positively to this development, seeing it as a major catalyst for growth.
• Vodafone Idea shares rally 7% on plans to fund Rs 10,000-crore expansion: Shares of Vodafone India rebounded on February 13, climbing as much as 7% to Rs 8.99, as upbeat management commentary lifted sentiment following a three-day decline on the bourses.The Mumbai-based telecom company suggests that it will?invest Rs 10,000 crore in expanding its network by the end of March, nearly matching its total capital expenditure for the first nine months of the fiscal year.
• Reliance share price hits 52-week low; drags Indian stock market for sixth straight session: Reliance Industries share price declined over 3% to hit 52- week low on Wednesday. Reliance shares fell as much as 3.31% to a fresh 52-week low of ?1,193.65 apiece on the BSE. The energy-to-telecom index heavyweight stock, Reliance Industries Ltd (RIL) share price has been facing heavy selling pressure as it has dropped over 6% in one week and over 3% in one month. RIL stock has fallen more than 17% in one year.

SECTOR HIGHLIGHTS

• Share of pharma companies saw red on February 14 as caution over the possibility of US tariffs hitting the sector spread across the Street. Nifty Pharma slipped nearly 3% to become the worst performing index in trade today. ?This came after US President Donald Trump?told reporters Thursday he would also levy tariffs on foreign cars, semiconductors and pharmaceuticals in addition to his plans of imposing reciprocal tariffs. shares of India's prominent drug makers--Dr Reddy's Laboratories, Sun Pharma, Lupin, Cipla, Zydus Life and Aurobindo Pharma--slipped 1-4%.
• Shares of nuclear energy-related companies such as BHEL, L&T, Kirloskar Brothers, KSB, Walchandnagar Industries, and Power Mech Projects fell by up to 6% on February 14 after Prime Minister Narendra Modi and US President Donald Trump announced plans to move forward with building American-designed nuclear reactors in India. This development has sparked concerns about the role of Indian companies in the nuclear energy value chain.
• The BSE Healthcare index has plunged 6% in past five sessions and 13% in 2025 so far amid fears that the US administration under the President Donald trump may impose 10% tariff on drug imports, hurting domestic pharma players.
• The Supreme Court of India on Friday dismissed review petitions filed by telecom companies, including Vodafone Idea and Bharti Airtel, seeking corrections in the calculation of their adjusted gross revenue (AGR) dues,reports said. Following the Supreme Court verdict, shares of telecom companies declined. Vodafone Idea share price fell as much as 4.16% to ?8.29 apiece, while Bharti Airtel shares declined 0.51% to ?1,705.00 on the BSE. High-weightage financials fell over 1% too on the news as higher telecom dues increase bank's credit risk exposure to telecom companies.
• SAIL, Tata Steel, other metal stocks rise up to 5% on Thursday on likely safeguard duty on steel imports. India could impose a temporary levy on steel from China in as soon as six months because of the serious challenge to domestic producers from cheap imports.
• Nifty Realty was the worst performing sector this week falling 9.40%. The Indian real estate sector has been one of the worst-performing segments of 2025 so far, with the Nifty Realty Index plunging nearly 20 per cent year-to-date (YTD). This sharp correction highlights investor concerns over regulatory challenges, liquidity constraints, and market-wide risk aversion despite positive policy measures such as the Reserve Bank of India's (RBI) recent rate cut.

BUSINESS-INDUSTRY UPDATES

• Prudential is said to hire Citigroup for $1 billion India IPO: Prudential Plc has hired Citigroup Inc. to help work on a potential initial public offering of Indian unit ICICI Prudential Asset Management Co. A listing could raise about $1 billion, but preparations are preliminary and details could change, the people said, adding that other banks are likely to join.
• Tata Steel to raise ?3000 crore via issuance of NCDs through private placement: Tata Steel board at its meeting held today, February 14, considered and approved fundraising via non-convertible debentures. Tata Steel plans to raise ?3,000 crore via issuance of 3,00,000 NCDs of ?1,00,000 each. The NCDs, it said, will be issued to eligible investors on a private placement basis. Despite the fundraising news, shares of Tata Steel ended the day 1.32% lower on the BSE at ?134.40 apiece.

QUARTERLY UPDATES

• IIFL Finance stock slumps 6% to 10-month low as Q3 profit plunges 85% YoY: Shares of IIFL Finance, a prominent NBFC specialising in retail credit, plunged 6% in intraday trade on February 14, touching a 10-month low of ?312.20 per share. The decline came after the company’s December quarter performance fell short of Street estimates, impacted by elevated credit costs and a slight deterioration in asset quality due to a cyclical economic slowdown.
• Natco Pharma stock falls 10%, extends decline to nearly 30% in two days; Rs 6,000-crore m-cap wiped out: NATCO Pharma share price on Friday slumped another 10% after weak earnings for the third quarter of the current fiscal. The shares of the company declined 20 percent a day earlier on Thursday. NATCO Pharma on February 12 reported a 37.75% decline in consolidated net profit to Rs 132.4 crore in the December quarter, hit by a drop in formulations exports.
• HAL posts quarterly profit jump on strong fighter jet demand: Hindustan Aeronautics Ltd posted a jump in third-quarter profit on Wednesday, driven by sustained demand for its aircraft from the country's defence ministry. The state-owned fighter jet manufacturer's consolidated net profit rose 14% to 14.40 billion rupees ($165.74 million) for the three-month period ended December 31.
• HCC nosedives 10% to hit fresh 52-week low on disappointing Q3 results: Shares of Hindustan Construction Company (HCC) plummeted 10% to a fresh 52-week low of Rs 25.6 on February 14 after the company posted dismal third-quarter (Q3FY25) results. HCC reported a net loss of Rs 216 crore in Q3FY25, a stark contrast to the Rs 68.5 crore profit it posted a year ago. Revenue nosedived 19.5% year-on-year to Rs 1,002.1 crore.