Indian Stock Market Faces Bearish Pressure Amid Auto Sales, Macro Data, FII Flows & Global Cues
Indian Stock Market : The Indian stock market is under intense selling pressure, extending its losing streak for the third consecutive week and hitting its lowest levels since June 2024. Investors are grappling with concerns over escalating US trade tariffs, global economic uncertainties, and persistent foreign fund outflows, contributing to a sharp decline in market sentiment.
As the first week of March begins, market participants will closely monitor key triggers, including monthly auto sales, Donald Trump’s tariff announcements, macroeconomic data, FII activity, and global cues, which will significantly influence market direction.
Stock Market Performance & Sectoral Overview
The Indian equity benchmarks, Sensex and Nifty 50, ended their consolidation phase with a sharp 3% decline last week due to weak global cues. The markets suffered their worst monthly fall in 29 years, with Nifty 50 and Sensex closing at 22,124.70 and 73,198.10, respectively.
The broader market also faced immense pressure, with the Nifty IT index hitting a six-month low, while mid-cap stocks officially entered a bear market, falling over 20% from their September 2024 peaks. The energy, IT, and realty sectors were among the worst performers.
Investors lost ₹9 lakh crore on Friday alone, with a total wealth erosion of ₹20 lakh crore for the week.
Key Market Triggers for the Upcoming Week
1. Macro Data & Auto Sales
As March begins, market participants will focus on key macroeconomic data and auto sales figures. India’s Composite PMI (Purchasing Managers’ Index) data for February is scheduled for release on March 5, with analysts predicting a reading of 60.6. A better-than-expected PMI figure would be a positive signal for the Indian economy, while a weaker-than-expected reading could reinforce bearish sentiments.
The auto sector’s performance will be closely watched, as sales figures for major automakers will reflect demand trends and consumer sentiment. Any signs of weakness in auto sales could weigh on market confidence.
2. Foreign Institutional Investor (FII) Activity
FIIs continued their selling spree in February, recording an outflow of ₹34,574 crore from Indian equities. Net institutional flows reflected:
- FII Outflows: ₹22,011 crore
- DII Inflows: ₹22,252 crore
Despite selling pressure, FIIs invested ₹11,051 crore in the primary market. However, the net outflow for 2025 so far stands at ₹1,12,601 crore.
Market experts suggest that FIIs are reallocating funds from Indian equities to Chinese stocks, where valuations are currently lower. This trend may persist until the valuation gap narrows or Indian markets stabilize.
3. Global Cues & US Trade Tariffs
Global factors will continue to play a significant role in shaping the Indian stock market’s trajectory. Key global events to watch include:
- US S&P Global Manufacturing PMI (March 3) – Estimated at 51.6
- UK S&P Global Manufacturing PMI (March 4) – Forecasted at 46.4
- China S&P Global Manufacturing PMI (March 4) – Expected at 50.6
Additionally, the US initial jobless claims data (March 6) and unemployment rate report (March 7) will provide insights into the US economy’s strength.
Donald Trump’s tariff policy remains a key risk factor. His proposed tariffs on Chinese and Indian imports have raised concerns about the impact on global trade, which could further weigh on market sentiment.
4. Corporate Action & IPO Market
The upcoming week will witness limited IPO activity, with only one SME issue opening for subscription. On the corporate action front, Metro Brands, SBI Life Insurance, and other stocks will trade ex-dividend from March 3.
5. Technical Analysis & Market Outlook
The Nifty 50 index is approaching the crucial support zone of 21,800-22,000. A break below this range could trigger further downside toward 21,000-21,200, officially pushing the index into a bear market.
Analysts expect market weakness to persist in the near term, but a gradual recovery could emerge in Q1 FY26, driven by improving earnings and easing global trade uncertainties.
Financial Ratios & Market Performance
| Metric | Value |
|---|---|
| Nifty 50 Closing | 22,124.70 |
| Sensex Closing | 73,198.10 |
| Nifty IT Index Low | 6-month low |
| Mid-Cap Decline | -20% from peak |
| FII Outflows (Feb 2025) | ₹34,574 crore |
| DII Inflows (Feb 2025) | ₹22,252 crore |
| PMI Forecast (Feb 2025) | 60.6 |
| Investor Wealth Erosion (Week) | ₹20 lakh crore |
| FII Net Outflow (2025 YTD) | ₹1,12,601 crore |
Conclusion
The Indian stock market is at a critical juncture, with investors closely tracking auto sales, macroeconomic data, FII activity, and global market trends. Donald Trump’s tariff policies and upcoming US economic data will further dictate sentiment.
With Nifty near a crucial support zone, market participants should exercise caution. While the short-term outlook remains bearish, a gradual recovery is expected as earnings improve and global economic uncertainties subside.
Investors should stay updated with global and domestic cues while adopting a cautious approach in the current volatile environment.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.