Godrej-Industries

With global tariff concerns & market volatility rising, will stocks rebound

 

On Thursday, February 20, 2025, the Indian stock market experienced a downturn, influenced by both domestic and international factors. The BSE Sensex declined by 197.87 points (0.26%), settling at 75,738.34, while the Nifty 50 fell by 33.60 points (0.15%) to close at 22,891.74.

 

Market Influencers

 

The market's decline was primarily driven by significant losses in heavyweight stocks such as HDFC Bank and Maruti Suzuki India. HDFC Bank saw a drop of 2.1%, attributed to discounted trades in multiple blocks. Maruti Suzuki India decreased by 2% following its parent company's announcement to reduce the number of electric vehicle launches in India from six to four by 2030. This strategic shift raised concerns about the company's future growth in the EV segment.

Global trade tensions also played a role in dampening investor sentiment. U.S. President Donald Trump's proposal to introduce tariffs of 25% or more on imports of automobiles, pharmaceuticals, and semiconductors has created uncertainty in global markets. The potential impact of these tariffs on international trade has led to cautiousness among investors.

 

Sectoral Performance

 

Despite the overall market decline, the midcap and smallcap indices demonstrated resilience, with gains of 0.5% and 0.8%, respectively. This suggests that investors are finding opportunities in smaller companies, possibly due to their growth potential and attractive valuations.

The financial sector, however, faced challenges, with the Nifty Financial Services index declining by 0.8%, largely due to the performance of HDFC Bank. Additionally, the automobile sector experienced pressure, influenced by Maruti Suzuki's strategic decisions and potential global trade barriers.

 

Top Gainers

 

Several companies bucked the overall market trend, posting notable gains:

Godrej Industries (Personal Care): Increased by 13.38% to ₹976.60.

Piramal Pharma (Pharmaceuticals & Drugs): Rose by 11.78% to ₹224.02.

Amara Raja Batteries (Auto Ancillaries): Gained 9.21% to ₹1,060.35.

Netweb Technologies (Computer Peripherals): Advanced by 8.8% to ₹1,604.45.

Linde India (Chemicals): Climbed 8.41% to ₹6,353.00.

These gains can be attributed to strong quarterly earnings, positive industry developments, or company-specific news that boosted investor confidence.

 

Top Losers

 

Conversely, some stocks faced declines:

HDFC Bank (Banking): Fell by 2.1%.

Maruti Suzuki India (Automobile): Decreased by 2%.

ITC (Cigarettes): Dropped by 1.2% amid reports of a potential tax hike on cigarettes.

VST Industries and Godfrey Phillips (Cigarettes): Both saw declines of 4% each, also influenced by tax hike concerns.

 

Foreign Investor Activity

 

Foreign investors have been net sellers in the Indian equity market, withdrawing approximately $12.31 billion so far in 2025. This trend is influenced by concerns over potential U.S. interest rate hikes, which could make emerging markets like India less attractive. The minutes from the U.S. Federal Reserve's January policy meeting highlighted worries about the inflationary impact of proposed tariffs, signaling the possibility of higher interest rates.

 

Commodity Market

 

In the commodities market, gold prices remained near record highs, driven by investor uncertainty over global trade policies and potential inflationary pressures. The demand for safe-haven assets like gold typically increases during periods of economic uncertainty.

The Indian stock market's performance on February 20, 2025, reflects a complex interplay of domestic challenges and global uncertainties. While certain sectors and midcap stocks have shown resilience, the broader market remains cautious due to potential global trade disruptions and domestic policy changes. Investors are advised to stay informed and consider a diversified approach to navigate the current market volatility.