Market Pulse | 28th February, 2025

MARKET OVERVIEW

India's Nifty 50 and Sensex fell 1.9%, closing at 22,124.70 and 73,198.10, down 6% for February—Nifty’s longest losing streak since 1996. The mid-cap and small-cap indexes dropped 11% and 13%, their worst since March 2020. Weak earnings, high valuations, and foreign outflows pushed Nifty 50 down 15% since September, erasing ?85 trillion (~$1 trillion) in wealth. Foreign investors sold $25 billion in equities since September, $4.1 billion in February alone. The rupee ended at 87.4950 against the U.S. dollar compared with 87.20 in the previous session. Nifty IT fell 8% on U.S. tariff concerns and AI competition. Nifty Realty dropped 6% due to weak sales and I-T searches at Prestige Estates. Nifty Media lost 7% amid merger reports. Nifty Auto declined 4%, led by Tata Motors and Apollo Tyres. NBFCs surged after RBI eased risk weights. UltraTech Cement fell 5%, dragging wires & cables stocks down up to 22%, erasing $3.6 billion in wealth.

India's economy grew 6.2% in Q3, driven by agriculture and services, with FY25 growth projected at 6.5%. The fiscal deficit for April-January stood at 74.5% of the full-year target, with spending at ?35.7 trillion. Infrastructure output rose 4.6% YoY in January, supported by cement and petroleum products. Gold had its worst week in three months, dropping 3.1% as the dollar strengthened. U.S. jobless claims saw their largest rise in five months due to weather disruptions. Bitcoin plunged 27% from its January peak amid economic, regulatory, and security concerns. Sterling rose 1.6% in February, its first monthly gain since September, despite U.S. tariff worries.

ECONOMIC HIGHLIGHTS

1) Indian economy grew 6.2% in Q3; FY25 growth pegged at 6.5%: The Indian economy recovered in the December quarter to grow at 6.2% after sinking to a seven-quarter low of 5.6% in the July-September period, according to data released on February 28. Quarterly numbers show that most of the pick up in the third quarter came from agriculture and services sector. Agri growth at 5.6% compared with 4.1% in the previous quarter was at a six quarter high.

2) India's infrastructure output rises 4.6% on-year in January: India's infrastructure output grew 4.6% year-on-year in January, backed by a pick up in cement and refined petroleum product output, government data showed on Friday. Infrastructure output, which tracks activity across eight sectors and makes up 40% of the country's industrial production, grew at a revised 4.8% in December, compared to the initial estimate of 4%. Infrastructure output rose 4.4% in April-January, compared to a 7.8% increase in the year-ago period.

3) India's April-January fiscal deficit at 74.5% of full-year target: India's fiscal deficit for April-January was 11.7 trillion rupees ($133.84 billion), or 74.5% of the estimate for the current financial year, government data showed on Friday. Net tax receipts for the first ten months of the financial year were at 19.04 trillion rupees, or 74.4% of the annual target, compared with 18.8 trillion rupees for the same period a year earlier, the data showed.

4) Rupee falls for fifth straight month in February on outflows, hedging demand: The Indian rupee logged its fifth straight monthly fall in February, weighed down by foreign portfolio outflows and increased hedging in the onshore and the non-deliverable forward market. The rupee ended at 87.4950 against the U.S. dollar compared with 87.20 in the previous session. The domestic unit fell 1% in February, and slipped to an all-time low of 87.95 during the month. However, periodic intervention by the Reserve Bank of India (RBI) largely curbed one-way moves on the domestic unit and prevented speculators from betting against the rupee.

GLOBAL HIGHLIGHTS

5) US weekly jobless claims post largest gain in five months; weather blamed: The number of Americans filing new applications for unemployment benefits posted the largest increase in five months last week, but the underlying trend in claims remained consistent with a steadily slowing labor market. The larger-than-expected rise in initial claims reported by the Labor Department on Thursday was likely the result of snowstorms in many parts of the country.

6) Sterling set for first monthly rise since September: The pound eased on Friday as nervy investors flocked to the dollar in light of growing pessimism over the outlook for the U.S. economy as President Donald Trump's tariffs are about to come into force. That said, sterling was still heading for its first monthly rise since September, driven less by optimism over the UK economy and more by the prospect of UK rates taking longer to fall than those elsewhere. Sterling was down 0.2% on the day at $1.259, having risen 1.6% in February, the most in a month since September's 1.9% gain.

7) Bitcoin Price Crashes Below $80K, down 27% from January Peak: Bitcoin has fallen to $79,856, down 27% from its January peak of $109,241, amid rising economic and regulatory concerns. Market volatility saw BTC fluctuating between $78,240 and $86,971 in a single day. The decline is driven by geopolitical tensions following new U.S. tariffs, a $1.5 billion security breach at Bybit, and ongoing regulatory uncertainty. Bitcoin’s increasing correlation with traditional markets has added to the pressure, with analysts warning of further declines if it falls below the $73,757 support level.

8) Gold set to record worst week in three months on robust dollar: Gold prices fell over 1% on Friday as the dollar held close to two-week highs after U.S. inflation data came in line with expectations, suggesting the Federal Reserve may adopt a cautious stance on additional rate cuts. Spot gold was down 1% at $2,846.19 an ounce. Bullion has so far lost 3.1% for the week, its steepest weekly fall since November. U.S. gold futures settled 1.6% lower at $2,848.50.

MARKET HIGHLIGHTS

9) India's Nifty posts longest monthly losing run since 1996:

• India's benchmark indexes logged their worst day in around five months on Friday, with Nifty 50 posting its longest monthly losing streak since 1996 on pessimism over domestic market conditions.
• The benchmark Nifty 50 and the BSE Sensex closed 1.9% lower at 22,124.70 and 73,198.10, respectively. They are down 6% for the month.
• Meanwhile, the broader and more domestically focussed mid-cap index confirmed a bear market, falling more than 20% from its September 24 record close, pressured by poor earnings, lofty valuations, looming U.S. tariff concerns and persistent foreign outflows.
• The mid-cap and small-cap indexes fell 11% and 13%, respectively, in February, their worst monthly performance since the COVID-19 pandemic-induced selling in March 2020.
• Weak earnings, persistent outflows and uncertainty regarding U.S. tariffs have dragged the Nifty about 15% lower from its September peak, eroding nearly 85 trillion rupees (nearly $1 trillion) in investor wealth.
• Foreign investors have sold Indian equities worth about $25 billion on a net basis since the end of September, of which $4.1 billion was in February.

10) Sanofi India shares rise 4% on strong topline and operational show: Shares of Sanofi India gained above 4% in early trade on February 28 following its Q4FY25 earnings, as the company?reported healthy revenue growth even as profitability faced some pressure amid ongoing transformation and expansions. For the quarter ended December 2024, the company’s revenue rose by 9.7 percent on-year to Rs 514.9 crore, up from Rs 469.2 crore in the corresponding quarter of the previous year. The topline growth reflects momentum across key therapeutic segments and successful product launches.

11) Granules shares fall 8% as US FDA issues warning letter after inspection at firm's Gagillapur facility: The shares of Granules India crashed over 8 percent on February 28 after the company announced that it has received a warning letter from the US Food and Drug Administration (FDA) for its Gagillapur facility in Hyderabad, following an inspection conducted in August 2024. Granules added that manufacturing and distribution of its existing products at the facility will continue unaffected. However, the warning letter may temporarily impact FDA's review of its pending product submissions from the site until the issue is resolved.

12) Angel One's AWS resources compromised in data leakage: The shares of Angel One tumbled nearly 4 percent in afternoon trade on February 28 after the company announced, citing inputs from dark-web monitoring partner, that some of its Amazon Web Services (AWS) resources were compromised in a data leakage. The company said it has immediately changed related credentials of its AWS cloud and other applications, to prevent further data leakage. Angel One added that it has engaged an external forensic partner to investigate the impact of the security breach and to conduct a thorough root cause analysis.

13) INOX India shares reverse recent losses to rise 13% after bagging top certification as cryogenic equipment maker: Shares of INOX India were sharply higher by about 13 percent in early trade on February 27, following the announcement that it has become India’s first cryogenic equipment manufacturer to receive the IATF 16949 certification after a rigorous audit of its Kalol facility in Gujarat.

14) Tata Motors shares nosedive 4%, hit 52-week low amid market selloff: Shares of Tata Motors plunged as much as 4 percent to Rs 623 on Friday, hitting a 52-week low and extending their losing streak for the fifth straight session. The stock has now fallen in seven of the last eight trading days. The sharp fall in Tata Motors’ stock follows a lacklustre third-quarter performance, cautious guidance, and pressure from a broader market correction.

SECTOR HIGHLIGHTS

15) Nifty IT plunged 8% this week, mainly due to significant losses in constituents such as L&T Technology Services, Mphasis, LTI Mindtree, and Tech Mahindra. All components of NIFTY IT experienced declines this week. Trade uncertainty arose after Trump threatened to impose reciprocal tariffs, affecting the US economy and contributing to the drop in IT shares. Globally, tech stocks retreated amid concerns over client AI spending and competition from lower-cost Chinese AI competitors. L&T Technology Services was the biggest loser this week, falling over 12%. The apprehension that the US might revert to a slow growth and high inflation path, potentially impacting IT spending by US companies, fueled the sharp decline.

16) NIFTY realty index tanked 6% this week after a five-session slump. Prestige Estates, Mahindra Lifespace, DLF and Oberoi Realty were the lead losers among NIFTY realty components. Declining residential real estate sales in key markets of Bengaluru and Hyderabad in the third quarter and a slowdown in new launches have hit the sentiment. According to a Kotak Securities report, new launches dropped by 35% year-on-year led by a 61% decline in Hyderabad and a 27% drop in Mumbai Metropolitan Region. Prestige Estates fell the most by 10% after the company informed exchanges about I-T searches at the registered office and other offices.

17) NIFTY Media index plunged by 7% this week following losses in Saregama, Network 18 and Tips Industries. PVR Inox, Hathway Cable and Dish TV also declined up to 10% this week. Media reports claimed that Tata Play and Airtel were considering a merger amid a challenging environment due to the rise of OTT entertainment players.

18) NIFTY Auto plunged by nearly 4% on Friday due to deep selling in Tata Motors, TVS, Bajaj Auto, Ashok Leyland and Apollo Tyres. Apollo Tyres tanked more than 8% while Tata Motors and Bajaj Auto declined more than 7% on a weekly basis.

19) Shares of NBFCs and microfinance institutions soared on Thursday after the RBI lowered risk weights for bank finance to non-banking finance companies and microfinance loans. CreditAccess Grameen surged around 11%, AU Small Finance Bank by over 6%, Shriram Finance by over 5%, Ujjivan Small Finance Bank by 3% and Bajaj Finance by over 2% on Thursday.

20) UltraTech Cement shares closed lower by nearly 5% on Thursday following its announcement to enter the wires & cables segment by setting up a ?1,800 crore plant at Bharuch in Gujarat. The development had a ripple effect in the wires and cables shares, which tanked up to 22%, wiping out investor wealth of around $3.6 billion. KEI Industries shares plunged 21.8%, RR Kabel by nearly 20% and Polycab by nearly 19%. Havells India dropped 7% and Finolex Cables by over 6%. - summarise all of this very short.

BUSINESS-INDUSTRY UPDATES

21) Airtel confirms talks with Tata Group on merger of DTH business: Bharti Airtel has confirmed that it is in talks with the Tata Group to explore a deal to merge Tata Play's direct-to-home (DTH) business with its subsidiary Bharti Telemedia Ltd.The Economic Times reported that the deal would likely be through a merger swap, with Airtel holding over 50 percent stake in the merged entity. The merger will help Airtel grow its revenue in the non-mobile segment.?

22) Indian grocery giant BigBasket eyes IPO in 2 years as business booms: India's BigBasket is planning to go public in the next 18 to 24 months, its CEO said, as the Tata Group-backed grocery giant seeks to tap surging demand for quick online deliveries of everything from fruits to Apple iPhones. The company is on track to double its business year-on-year by March 2026 and expand to about 70 Indian cities from 35 currently over the next year. BigBasket's plans for its listing in India come as the domestic quick commerce industry sees high double-digit sales growth, with rivals such as Swiggy's Instamart and Zomato's Blinkit racing to make the most of red-hot demand for 10-minute deliveries in urban metros.

23) India's Piramal Enterprises hit with nearly $172 million tax bill for pharma deal: India's Piramal Enterprises said in an exchange filing on Friday that it had received a tax demand of 15.02 billion rupees (nearly $172 million) for the sale of its pharmaceutical business to Piramal Pharma in fiscal year 2021. A tax office in the state of Maharashtra has asked the financial services company to pay 18% Goods and Services Tax (GST) on the deal, the latter said in the filing.

24) Tata Investment share price zooms 10% after Tata Capital’s IPO move: Tata Investment share price zoomed 10 per cent in Tuesday's trading session to ?6,220.75 on the National Stock Exchange (NSE) after Tata Capital approved plans for an initial public offering (IPO). Tata Capital's IPO will include a fresh issue of shares with a face value of ?10 each, amounting to ?23 crore. The rest of the offering will comprise an offer for sale (OFS) by select existing and eligible shareholders.

25) HDFC Bank to grow loan securitisation business over next few years: HDFC Bank, India's largest private lender by assets, will grow its loan securitisation business over the next few years to meet rising investor demand, the bank's chief financial officer said. The bank's broader objective in the near term remains to grow its deposit book more quickly than loans, with particular focus on raising the share of lower-cost retail deposits.The bank said in January it will grow its deposits at a pace above the banking system in the upcoming financial year starting April 1, while growing loans at a rate close to the market.