Indian equity market seems highly distorted due to weak global and domestic cues. Amid the ongoing selling on Dalal Street, the cumulative market capitalisation of BSE-listed firms tanked more than Rs 17 lakh crore in February so far. The benchmark equity index BSE Sensex declined nearly 2% during the same period. On the other hand, broader indices the BSE Midcap and BSE Smallcap slipped around 5% each month-to-date.
On the domestic front, lackluster corporate earnings have intensified selling pressure, while globally, escalating concerns over a potential trade war between the US and its major exporting partners have further unsettled investors.
So, where is the market headed? In an interaction with Business Today, Vishnu Kant Upadhyay, AVP-Research & Advisory, Master Capital Services, said, “Currently, the market is sentiment-driven, with technical levels playing a secondary role. However, from a technical perspective, 22,700-22,800 serves as an immediate support zone, and a decisive breakdown below this level could push prices further toward 22,000, where the market may attempt to stabilise. On the upside, 23,800-24,000 remains a strong resistance zone, and a sustained breakout above this range is essential to revive bullish sentiment in the near term.” The 50-share NSE Nifty index traded around 23,025 in the afternoon trade on February 12.
Asked which sectors may deliver robust returns to investors going ahead? Upadhyay added that the government’s continued focus and need to develop India on sustainable capital expenditure, particularly in sectors like roads, railways, and renewable energy, is likely to drive growth in related industries such as construction, cement, and capital goods.
“In the recent quarterly results, leading IT firms conveyed a positive outlook, particularly emphasising recovery in discretionary demand from major countries like US and robust prospects in BFSI sector. The developments indicate that the industry is on a path of steady recovery, supported by stabilising client budgets and an uptick in discretionary spending,” he said.
Further, he said that the relief in income tax announced in the recent budget, particularly for the middle class is likely to boost discretionary spending among citizens as it will leave more disposable income in the hands of consumers. Sectors like consumer goods, retail and tourism which generally facilitate discretionary spending are likely to benefit.
For stock-specific investors, he advised investors to zero in on IndusInd Bank and Infosys. “IndusInd Bank is trading nearly 35% down from its recent 52-week high but now showing signs of recovery. The stock recently broke out of a rectangle pattern and is holding support above this breakout level, reflecting growing strength. On the other hand, prices have formed a bullish ascending triangle pattern in Infosys on the weekly chart, indicating strong accumulation and the potential for a positive trend,” he said.
While sharing key takeaways from the Q3 results, Upadhyay said overall earnings for the December quarter have given moderated results with signs of ordinary growth. Several sectors have shown a slower-than-anticipated recovery, adding to the negative sentiment already affected by high valuations.
“The high valuations on which the Indian equity market was trailing couldn’t justify the growth. Further, concerns regarding slowing economic growth also created a challenging environment for the Indian stock market which led to continuous selling by foreign investors,” he said, adding the potential recovery in the upcoming quarter for Indian companies appears promising, driven by a combination of various favourable factors.
Meanwhile, The Union Budget 2025 introduced several measures to boost rural development and agriculture, these initiatives are expected to enhance rural incomes and consumption. “The increase in tax exemption limit is ready to leave more money in the hands of people, which will also lead to a boost in consumption and investment. Recently, the RBI also reduced its repo rate, making it easier for financial institutions and businesses to lend as well as borrow at lower rates, potentially leading to ease of investment and encouraged spending by consumers. Challenges still persist in some sectors that are import-export oriented because of evolving geo-political dynamics,” he said.