Stock Market- Week Ahead: Key Market Triggers Include Trump Tariffs, INR-USD Exchange Rate, FII Outflows, and Global Cues for Indian Stocks

Indian Stock Market Extends Losing Streak: Key Triggers to Watch in the Week Ahead

The Indian stock market resumed its downward trend after a brief two-week recovery, marking its longest losing streak in two years with eight consecutive sessions of declines. The market sentiment remained bearish from the outset, driven by a "sell-on-rally" approach amid multiple external pressures.

As the third week of February approaches, investors will closely monitor several key triggers that could influence market direction. These include Donald Trump's tariff announcements, the INR-USD exchange rate, foreign institutional investor (FII) outflows, domestic and global macroeconomic data, and broader global market trends.

Domestic equity benchmarks, the Sensex and Nifty 50, fell below their critical psychological levels of 76,000 and 23,000, respectively, weighed down by persistent FII outflows, concerns over US trade tariffs, and weak quarterly earnings. Both indices dropped by 2% each, marking their worst weekly performance in two months.

On Friday, the 30-share BSE Sensex declined by 199.76 points (0.26%) to close at 75,939.21, while the NSE Nifty 50 fell by 102.15 points (0.44%) to settle at 22,929.25. The volatility index, India VIX, cooled slightly but remained elevated at 15.02, up 0.40%.

Since February 5, 2025, the Nifty 50 has fallen by 4% and is now 13% below its September 2024 peak. Over the week, the Sensex plunged by 1,920.98 points (2.46%), and the Nifty dropped by 630.7 points (2.67%), marking their worst weekly performance in 2025.

Key Triggers for the Week Ahead

1. Trump Tariffs

Investors are wary of the potential impact of US President Donald Trump's plans to impose reciprocal tariffs, which analysts believe could disproportionately affect India among Asian peers. While the implementation of these tariffs may be delayed, the uncertainty has already rattled global markets, including India.

2. INR-USD Exchange Rate

The Indian rupee has been volatile due to global macroeconomic uncertainties. On Friday, it gained 12 paise to close at 86.81 against the US dollar, supported by a weaker dollar and lower CPI data. However, rising crude oil prices and FII outflows continue to pressure the currency. Analysts expect the rupee to trade between 86.40 and 87.25 in the near term.

3. FII Outflows

FIIs have been net sellers in the Indian market, with outflows totalling ₹19,004 crores in the cash segment last week. Despite strong domestic institutional investor (DII) inflows of ₹18,745 crore, FII selling has weighed heavily on large-cap stocks. The total FII outflow for 2025 stands at ₹1,05,145 crore, driven by attractive US bond yields and global uncertainties.

4. Global Cues

Global markets remain cautious amid speculation over US trade policies and their impact on international trade. The US dollar's strength and high valuations in emerging markets, including India, are likely to keep investors on edge.

5. Domestic and Global Data

Investors will closely watch domestic economic indicators and global data releases, including US retail sales and core retail sales figures, which could influence market sentiment.

6. Corporate Actions

Several companies, including Oil India, Gillette, and Natco Pharma, will trade ex-dividend this week. Additionally, a few stocks will trade ex-split and ex-bonus, which could impact their prices.

7. Technical Levels

The Nifty 50 has crucial support levels at 22,800-22,750. A breach below these levels could push the index toward 22,500 and potentially 22,000. Analysts recommend caution and a focus on long-term accumulation strategies.

Market Outlook

Vinod Nair, Head of Research at Geojit Financial Services, noted that the market is in the final phase of consolidation, with the broad market having corrected by 14%. He believes the downside is limited, supported by strong long-term economic fundamentals, making this an opportune time for long-term investors to accumulate quality stocks.

IPO and Listings

The primary market will see a softer trend this week, with no new mainboard IPOs opening for subscription. However, the Quality Power IPO will close on February 18, and two SME IPOs will open for bidding. Listings of Hexaware Technologies and Quality Power Electrical Equipments are scheduled for February 19 and 21, respectively.

Conclusion

The Indian stock market faces multiple headwinds, including global trade uncertainties, FII outflows, and currency volatility. While the short-term outlook remains cautious, long-term investors may find value in the current correction. Key triggers such as Trump tariffs, INR-USD dynamics, and global cues will dictate market movements in the coming week.