Nifty 50 drops for 6th consecutive day, Sensex gains on financial stocks

Indian stock markets ended flat on February 25, with a lackluster sentiment prevailing throughout the trading session, despite outperforming their Asian counterparts. Restrictions on Chinese investments and concerns about U.S. President Donald Trump's tariffs weighed on the markets, leading to cautious sentiment and narrow trading ranges.

Trump's recent memorandum aimed at limiting Chinese investments in strategic sectors affected metal stocks in India, as fears grew that it could dampen metal demand in China, the world's largest consumer of metals. Meanwhile, the decision to proceed with tariffs on Canada and Mexico contributed to investor unease, resulting in reduced market participation.

The Nifty 50 closed slightly lower, down by 0.03% at 22,547, while the Sensex gained 0.20%, closing at 74,602, bolstered by a surge in financial stocks, helping the index snap its five-day losing streak.

The Nifty Midcap 100 index dropped 0.88%, ending at 49,702, and the Nifty Smallcap 100 index fell 0.44%, closing at 15,408. Indian markets will be closed on Wednesday for Mahashivratri.

Vinod Nair, Head of Research at Geojit Financial Services, commented, "The market traded in a narrow range amid anticipation of key economic data and the monthly expiry. Continued declines in small and mid-cap stocks reflect concerns over high valuations. Market sentiment remains cautious due to persistent pressure on the INR, ongoing FII outflows, and tariff-related developments."

The Nifty Metal index was the biggest sectoral loser, falling 1.54%, followed by Nifty Realty, which dropped 1.31%. Other sectors, including Nifty PSU Bank, Nifty Oil & Gas, Nifty IT, and Nifty Pharma, also recorded losses ranging from 0.69% to 1.31%.

On a positive note, Nifty Media was the top performer, gaining 0.84%, with Nifty Consumer Durables, Nifty Auto, and Nifty FMCG also ending with modest gains.

The market's cautious mood was driven by Trump's tariff announcements, which have shaken investor confidence and resulted in a more cautious market sentiment. This has kept front-line indices within a narrow trading range, as investors await further clarity.

Technical Outlook

Rupak De, Senior Technical Analyst at LKP Securities, mentioned that market sentiment continues to favor the bears, as the Nifty sustained below the 21EMA on the hourly chart, signaling selling pressure on rallies. Support for the index is at 22,500, and a breach could worsen sentiment. On the upside, resistance lies at 22,650 and 22,750-22,800, with any rise towards these levels likely to attract selling.

Shrikant Chouhan, Head of Equity Research at Kotak Securities, noted that the market showed range-bound activity, with some buying seen in media stocks while metal and realty indices corrected sharply. On daily charts, the market has formed a small candle, indicating non-directional activity, with key support and resistance levels at 22,400 and 22,800.

Disclaimer: The views expressed in this article are those of individual analysts. We advise investors to consult certified experts before making any investment decisions.