- The BSE Sensex closed at 73,198.10 down by 6% and the Nifty 50 closed at 22,124.70 down by 6% in February 2025. This is the 5th consecutive month of negative return, marking the second-largest drop since March 2020, something that has not happened since 1996.
- Just months ago, in Sept’ 24, the Sensex soared to dizzying heights of nearly 86,000 and the Nifty sprinted past 26,200.
- With BSE 500 shedding 19% from recent peak in Sept’24, post climbing 15% in 2024 & 25% in 2023.
- This market correction has coincided with a slowdown in earnings growth, concerns over global economic growth due to the tariff war, and FII outflows.
- High valuation with leverage position of HNI and retail investor lead to sharp correction in February. Withdrawal of money from the secondary market due to various primary issues in the form of IPO, FPO and QIP also reduced the money in the secondary market to support the fall.
- FIIs recorded 2nd consecutive month with outflows of $ 5.4 billion in Feb’25 following $ 8.4 billion of outflows in Jan’25, reducing India’s global market cap share to 3.6%, the lowest in 16 months. FII continued its selling in the Indian equity market whereas reciprocal tariffs by US created uncertainty.
- Conversely, domestic inflows remained strong at $ 7 billion in Feb’25 vs. inflows of $ 10 billion in Jan’25. DII inflows into equities in CY25 continue to be strong at $ 18 billion vs. $ 63 billion in CY24.
- In-spite of market slowdown, economy is showing some sigh of improvement in Q4FY25 wherein the result is likely to show higher growth as compared to Q3FY25 growth. The agriculture sector has posted steady growth, which could boost rural consumption. The reduction in interest rates by RBI can support the economic growth.
Acknowledgements:
RBI Bulletin (www.bulletin.rbi.org.in), SEBI (www.sebi.gov.in), NSE (www.nseindia.com), BSE (www.bseindia.com)
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