Market Pulse | 21st February, 2025

MARKET OVERVIEW

Global markets were marked by uncertainty as gold prices surged to record highs for the eighth consecutive week, reflecting investor concerns over economic growth and political instability. Business activity in the United States slowed significantly amid tariff concerns and federal spending cuts, with inflation expectations reaching their highest levels in years. In the United Kingdom, inflation rose more than expected, testing the central bank’s outlook, while Chinese technology stocks enjoyed their best winning streak in five years, driven by strong earnings and renewed interest in artificial intelligence.

Meanwhile, back home, India's private sector growth accelerated to its fastest pace in six months, led by a robust expansion in the services sector and record job creation, even as manufacturing showed a slight dip.? Indian stock markets remained volatile as global trade tensions and sustained selling by foreign investors pressured benchmark indices. Large-cap stocks struggled, while midcap and smallcap segments staged a recovery. In sectoral trends, metals outperformed, while pharma, IT, and auto stocks struggled due to policy uncertainties. Among individual stocks, shares of Godrej Industries saw a sharp rally following strong earnings, while major SUV manufacturer M&M recorded its worst weekly performance in five years amid concerns over new competition. Meanwhile, major business developments included Qatar's $10 billion investment commitment in India and Religare Enterprises' rally as the Burman family secured control.

ECONOMIC HIGHLIGHTS

INDIA

• India Feb business growth at 6-month high, fueled by services and jobs surge, PMI shows: Growth in India’s private sector accelerated at its fastest pace in six months in February due to a surge in services activity that enabled businesses to pass on rising input costs to customers, according to a survey that also showed job creation was at a record high. Growth was led by the dominant services sector with its index reaching 61.1 this month - the highest since March last year - from 56.5 in January. That offset a slight dip in a manufacturing PMI which fell to 57.1 from 57.7, though still indicating healthy expansion.

GLOBAL HIGHLIGHTS

• Gold hits record high this week, eyes eighth weekly gain: Gold prices have shattered two record highs this week to trade above $2,950 an oz, as uncertainties surrounding global economic growth and political instability have underscored investor appetite for bullion, which has risen 11.5% so far in 2025. However, investors are also monitoring the U.S. Federal Reserve's interest rate trajectory for clues, given that Trump's policies are viewed as inflationary. Higher inflation could compel the Fed to maintain high interest rates, thus reducing the allure of non-yielding gold.
• US business activity stalling, consumers' inflation expectations surge: U.S. business activity nearly stalled in February due to tariff concerns and federal spending cuts, wiping out post-Trump election gains. The business activity index hit a 17-month low, manufacturing prices surged to late 2022 levels, and consumer inflation expectations reached a 15-month high, with long-term expectations at their highest since 1995.
• UK inflation jumps more than expected in January, testing the BoE's outlook: British inflation sped up by more than expected to hit a 10-month high of 3.0% in January and is likely to rise further soon, testing the Bank of England's confidence that price pressures will ease over the longer term. The increase in January was driven largely by a smaller-than-usual drop in air fares that month - a volatile component that had pushed inflation down in December - and a rise in automotive fuel prices.
• China tech stocks cap best winning run in five years on earnings surprises, fund rotation: Chinese tech stocks listed in Hong Kong advanced on Friday for their best weekly winning streak since 2020, as earnings surprises and optimism about the artificial intelligence sector drew global investors rotating funds into the sector. The Hang Seng Tech Index?closed up 6.5%, its best single-day gain since October, to reach its highest in three years. That took its weekly gain to more than 6% in its sixth straight week of advances, the longest winning streak since May 2020.

MARKET HIGHLIGHTS

Equity benchmarks log weekly losses on US tariff risks

• For the week, the benchmarks Nifty and Sensex, have fallen 0.58% and 0.83%, respectively. Both indexes ended at their lowest since early June on Friday.
• Tariff threats by US President Donald Trump kept investors on their toes, leading to profit-taking in large-caps, while broader markets saw bottom-fishing as well. Sectors exposed to the US markets came under pressure, while domestic consumption led to buying in some shares.
• Continued selling by Foreign Institutional Investors (FIIs) amid renewed interest in Chinese shares also weighed on the largecaps. Hawkish FOMC minutes suggested the Fed is likely to hold rates for some time amid threats of tariffs stoking up inflation and derailing global growth trajectory.
• Broader midcap and smallcap indices rebounded this week closing higher by up to 2% and outperforming the largecaps. Among midcap shares, Godrej Industries, GlaxoSmithKline, NLC India and Linde India led the recovery while NAVA Ltd, Kalpataru, TVS Holding and PTC India were major smallcap movers.
• Godrej Industries surges 38% in five sessions on robust Q3 results: Godrej Industries saw a significant increase in its stock price, jumping 13.2% on Friday and up 38% over the past five trading sessions, following better-than-expected third-quarter results which helped the stock erase most of its losses since October. The company reported a 90% yearly growth in consolidated profits and a 34% increase in revenue from operations.
• Bikaji Foods shares surge 19% on high volumes, biggest single-day jump in 8 months: Bikaji Foods share price advanced 19 percent in February 19 trade on high volumes. It was the biggest single-day jump for the shares of the company in the last eight months. For the third quarter, the Net profit of the company plunged 39 percent on year to Rs 28.6 crore, down from the Rs 46.6 crore that it clocked in a year ago.The company faced inflationary pressures on key raw materials such as edible oil, potatoes, and besan which sharply lifted its input bill.
• Zen Technologies share price drops another 10% to hit 8-month low, down 60% in less than 2 months:? Shares of Zen Technologies, a leader in defence simulation and anti-drone technology, declined for the third session on February 8, recording a 10% drop to hit an 8-month low of ?976 apiece. In the previous trading session, the stock reached the 20% lower circuit limit as the company’s December quarter performance failed to excite investors. A drop in its order book and a fall in core profit margins dented investor sentiment, leading the once high-flying stock to touch multi-month lows.
• FII holdings hit lowest level since March 2024; sell shares worth $11.4 billion in CY25: Sharp correction in the Indian stock market and the unabated selling by foreign institutional investors (FIIs) saw the value of their assets under custody (AUC) drop to an 11-month low in the first half of February. As of mid-February, FIIs' AUC stood at Rs 64.78 lakh crore, the lowest level since March 2024, marking a decline of Rs 13.18 lakh crore from its peak of Rs 77.96 lakh crore in September 2024. Since the beginning of 2025, FIIs have sold shares worth nearly Rs 1.07 lakh crore in Indian equities.

SECTOR HIGHLIGHTS

The Nifty sectoral indices witnessed a mixed trend this week amid volatility in the broader market. While most of the major sectoral indices traded in the negative territory, three indices showed resilience in a weak market. Nifty Metal was the top gainer among the sectoral indices by rising more than 5% despite a weak market. Nifty Oil and Gas and Nifty Realty gained 2.25% and 1.57%, respectively, on a weekly basis.

• Pharma (Nifty Pharma), stocks have lost 2.1% this week as President Donald Trump said he intends to impose at least 25% tariffs on the sector. The U.S. accounts for nearly 31% of India's total pharma exports.
• IT (Nifty IT) which also gets a significant portion of its revenue from the U.S., slid about 2% this week.
• Autos (Nifty Auto) dropped 2.6% this week on worries over competition as reports said that India may slash the import duty on electric vehicles to 15% from 110% as Tesla prepares to enter the market. M&M's shares have declined nearly 10% so far this week, having already declined 8% last week.
• Shares of aluminium manufacturers—Hindalco Industries, National Aluminium Co, and Vedanta, have been on a strong rally over the past week, climbing 7-10 percent, driven by a surge in base metal prices. Higher metal prices tend to bode well for companies like Hindalco, NALCO and Vedanta as it aids their profit margins. To that effect, these stocks have seen strong buying action this past week, which has also lifted the Nifty Metal index nearly 5 per cent higher.
• The Nifty FMCG index fell nearly 2% for the week, extending its losing streak to 15 straight sessions, weighed down by concerns over a consumption slowdown.
• Cigarette stocks like ITC, VST Industries and Godfrey Phillips fell up to 4% on Thursday after ET reported that the government may raise GST on tobacco products once it stops levying a compensation cess on these items. Following the news, VST Industries shares fell 4% to day's low of Rs 287.20, Godfrey Phillips stock fell about 4% while ITC fell over 2% to fall below the Rs 400-mark.

BUSINESS-INDUSTRY UPDATES

• Religare Enterprises surges after Burman Family secures majority control: Religare Enterprises jumped 11.30% to Rs 248.20 as the Burman family, the promoters of Dabur, secured majority control of the company and assumed promoter status. This development comes despite a lukewarm response to their recent open offer to acquire an additional 26% stake. These strategic acquisitions have allowed the Burmans to effectively take control of Religare Enterprises.
• Government set to hike deposit insurance to Rs 8-12 lakh by end of February: A proposal to raise the insurance coverage for bank deposits from the current ?5 lakh to ?8-12 lakh is in its final stages and may be announced as early as the end of February. Analysts linked the decline in share prices of HDFC Bank (down 2.3%) and ICICI Bank (down 0.9%) on Thursday to this development.
• Qatar commits to investing $10 bln in India: Qatar has committed to investing $10 billion in India across various sectors, the two nations said in a joint statement on Tuesday, after Qatar's Emir Sheikh Tamim bin Hamad Al-Thani visited New Delhi. According to the statement, Qatar will invest $10 billion in India in infrastructure, technology, manufacturing, food security, logistics, hospitality and other sectors. The two countries will aim to double their annual trade to $28 billion in the next five years and are exploring the signing of a free trade agreement, the Indian foreign ministry said earlier in the day.
• RVNL shares jump 11%, snap 3-day losing streak over Rs 554-crore Karnataka project: The shares of Rail Vikas Nigam Limited (RVNL) surged nearly 11 percent on February 19 to trade at Rs 369 apiece after the company announced that it has received a letter of acceptance (LoA) for a joint venture project worth Rs 554 crore for the Bengaluru Suburban Rail Project (BSRP) in Karnataka.