Sensex, Nifty Extend Losses as Auto and Bank Stocks Drag Markets Down

The Indian stock markets continued their downward trend on February 11, with the Sensex and Nifty closing in the red for the fifth consecutive session. Investor sentiment remained weak as global uncertainties, escalating trade tensions, and weak domestic earnings dampened optimism. Over the past four sessions, the benchmark indices have shed 1.5 percent, largely due to renewed U.S. tariff threats and relentless foreign institutional investor (FII) outflows.

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At 9:50 AM, the Sensex was down 200 points, or 0.3 percent, at 77,090, while the Nifty fell by 65 points, or 0.3 percent, to 23,316. Market breadth was significantly negative, with 387 stocks advancing against 1,988 declining on the NSE.

Trump’s Tariff Actions Trigger Market Uncertainty

Adding to the volatility, U.S. President Donald Trump signed executive orders on February 10, reinstating and expanding tariffs on steel and aluminum imports. This move escalated trade tensions with key U.S. allies by revoking previous exemptions and duty-free quotas for major suppliers like Canada, Mexico, and Brazil, increasing the risk of a broader trade war.

The new measures include raising aluminum tariffs from 10 percent to 25 percent, reversing exemptions granted under the 2018 Section 232 national security tariffs. Additionally, the reinstatement of a 25 percent tariff on millions of tons of steel and aluminum imports that previously entered the U.S. duty-free is expected to disrupt global supply chains and weaken investor confidence.

Sandip Agarwal, Fund Manager and Co-Founder at Sowilo Investment Managers LLP, attributed the ongoing market decline to the rupee’s depreciation. "When the rupee weakens, FII selling intensifies because their real returns diminish. Until the rupee stabilizes, we will continue to see panic selling," he stated.

Foreign Institutional Investors Continue Selling Spree

Foreign investors have already pulled out Rs 12,643 crore from Indian equities this month, accelerating downward pressure. The Indian rupee also hit a fresh record low on February 10 due to the strengthening U.S. dollar following Trump's latest tariff policies.

Agarwal downplayed the direct impact of the U.S. tariffs on India, explaining that the country’s trade imbalance with the U.S. is primarily service-driven, affecting mainly IT companies rather than manufacturers. "The market’s decline is more about currency weakness and investor positioning rather than tariffs," he added.

Auto and Bank Stocks Lead Market Decline

Among sectoral indices, banking and automobile stocks faced the most pressure. The Nifty Bank index fell half a percent, while the Nifty Auto index declined over a percent, both weighing down the Nifty.

Eicher Motors shares plunged over 5 percent after missing Q3FY25 profit and margin estimates, primarily due to higher costs and weaker sales of high-margin motorcycles. Tractor manufacturer Escorts Kubota also saw a decline of over 2 percent after reporting weak earnings and issuing a subdued outlook for the upcoming quarters.

Key Stock Movements

Several stocks saw notable movements during the session:

1. Mazagon Dock Shipbuilders surged 9.4 percent to Rs 2,440, marking its second consecutive session of strong gains after reporting a 29 percent increase in consolidated net profit to Rs 807 crore.
2. Bharat Electronics Ltd. (BEL) edged up nearly 1 percent to Rs 202.85 after securing multiple orders worth Rs 962 crore, including a Rs 610 crore contract with the Indian Navy.
3. Brainbees Solutions rose over 4 percent, despite reporting a net loss of Rs 14.7 crore for Q3FY25.
4. Torrent Power fell 3 percent after Morgan Stanley downgraded the stock to "Equal Weight" from "Overweight," slashing its 12-month target price from Rs 2,026 to Rs 1,413.
5. Eicher Motors, Apollo Hospitals, Power Grid, Coal India, and Kotak Mahindra Bank were among the biggest losers, declining between 1-5 percent.
6. Adani Enterprises, Grasim, Hindalco, Adani Ports, and Infosys led the gainers, rising 1-4 percent.

Global Market Trends and Outlook

Despite Trump’s tariff jitters, Wall Street ended higher on February 10, driven by strong performances in Nvidia and other AI-related stocks. Interestingly, steelmakers surged in the U.S. after Trump’s tariff announcement, reflecting a mixed sentiment in global markets.

Asian markets mirrored Wall Street’s resilience, trading mostly higher as investors appeared to look past Trump’s escalating trade campaign.

Technical Analysis and Market Outlook

Anand James, Chief Market Strategist at Geojit Financial Services, noted that support at 23,300 had momentarily paused the decline for the Nifty 50. However, technical indicators do not suggest a strong rebound yet. "While an upswing is possible, resistance at 23,480-23,530 could limit gains, with a breakout above 23,600 needed for a bullish shift. A rejection from this level may pull the Nifty back to 23,300 or even 23,220-23,060, though a major collapse is unlikely today," James stated.

Conclusion

The ongoing market sell-off, driven by global trade tensions, currency depreciation, and FII outflows, has kept investors on edge. With continued pressure on key sectors such as banking and automobiles, along with concerns over U.S. trade policies, markets may remain volatile in the near term. However, analysts believe that once the rupee stabilizes and fundamentals regain focus, a recovery could be on the horizon. Investors are advised to exercise caution and monitor global developments closely.