The Indian stock market is poised for another tumultuous session on February 25, 2025, as benchmark indices reflect the continuing turmoil stemming from global economic pressures and domestic selling trends. The Sensex and Nifty 50 are likely to open on a tepid note, with GIFT Nifty indicating sluggish prospects at around 22,588 points, roughly 20 points behind the last closing values of Nifty futures.
On Monday, the Sensex suffered significantly, dropping 856.65 points or 1.14%, finishing at 74,454.41, with the Nifty 50 closing down 242.55 points or 1.06% at 22,553.35. Such declines indicate the prevailing bearish sentiment, influenced heavily by foreign institutional investors (FIIs) selling off shares. According to analysts, this trend is expected to continue as global factors weigh down local market optimism.
For the first time in two decades, the fast-moving consumer goods (FMCG) sector, featuring giants like Hindustan Unilever and ITC, faces challenges as the Nifty FMCG index has declined by 20.2% since its peak at the end of September 2024, compared to the Nifty 50’s 12.6% fall. Year-to-date, the FMCG sector is down 8%, against 4.6% for the Nifty 50, highlighting stark challenges facing consumer goods.
Rising Valuations and Future Outlook
The sharp downturn across the indices since last September has, paradoxically, presented opportunities for long-term investors as analysts claim valuations are now attractive. An estimated 272 of the top 500 market-cap stocks have seen declines exceeding 20%, opening the door for strategic stock-picking, as mentioned by Samco Securities. The Nifty 100 is currently trading at a price-to-earnings (PE) ratio of 20.6x, down from 24.88x, signaling potentially lucrative investment prospects.
Investment activity will be buoyed by specific company movements. For example, Indorama Ventures is poised to acquire 24.9% of EPL for ₹1,910 crore, slated to close soon pending regulatory approvals. Similarly, Ireda is seeking to boost its capital base by raising up to ₹5,000 crore, which has already received shareholder backing.
Meanwhile, some companies are responding to market trends with price adjustments. Nestle India plans to hike prices for its products to counter inflationary pressures from rising costs of coffee, cocoa, and edible oil. Managing Director Suresh Narayanan is cautious, emphasizing the need to control price hikes to maintain sales volumes.
Technical Analysis and Predictions
From a technical standpoint, analysts are observing patterns and resistance levels closely. Shrikant Chouhan of Kotak Securities notes the Sensex has formed bearish candles on daily charts, indicating possible weakness moving forward. This market texture, viewed through the lens of technical analysis, suggests volatility may continue with the possibility of pulling back to the 74,000-73,800 range if it slips below 74,900.
Nifty derivatives exhibit caution, with call writers dominating put sellers, showing the market’s bearish undertone. Nevertheless, Dhupesh Dhameja, also from SAMCO Securities, identifies strong support around the 22,500 level, which could act as a cushion against heavy sell-offs.
The broader market remains fragile, as reflected by Nifty's movements. Nagaraj Shetti at HDFC Securities points out recent downturns showing inadequate strength at key support levels. Immediate resistance rests at 22,750, indicating uncertainty as Nifty attempts to reclaim higher positions.
Considering these dynamics, Om Mehra from SAMCO Securities advises avoiding bottom-fishing strategies since any temporary upticks remain opportunities for selling at elevated levels.
Stock Picks and Market Dynamics
For traders, stock-specific actions are being deemed more favorable than overarching market trends. Raja Venkatraman of NeoTrader has selected stocks such as KIRINDUS, TEXINFRA, and KOTAK BANK for potential purchases, emphasizing their downtrends could tip to bullish reversals amid the continuing market weakness.
Industry news also reflects mixed fortunes. Companies like Tata Communications and Torrent Power continue to innovate and secure financing for their expansion plans, showing resilience against broader market turbulence. Tata has issued commercial papers to raise ₹465 crore, and Torrent has structured plans for renewable energy generation through its newly formed company, Torrent Urja.
Overall, as the Indian stock market approaches the end of February 2025, the outlook remains cautiously optimistic. Investors are encouraged to stay informed and prepared for potential volatility, ensuring they are equipped to navigate the expected fluctuations influenced by both domestic and international factors.