Stock Market Weekly Outlook: What Will Impact Sensex, Nifty From February 24-28? GDP Data Eyed

Stock Market Weekly Outlook: After a tumultuous last week, the Sensex is currently around 75,300 and the Nifty 50 is below 22,800 levels. Both benchmarks ended their latest weekly performance in red with a marginal downside. Among key reasons to drag the Indian market is the relentless selling from FIIs, coupled with Trump's new tariff threats on auto components, semiconductors and pharmaceutical products. Additionally, the hawkish stance from FOMC minutes, and the 'Sell India, Buy China' strategy added to the woes. In the coming week, the Indian stock market tone remained cautious, with key macroeconomic data and earnings to sway sentiment.

Last week on February 21, Sensex stood at 75,311.06, down by 424.90 points or 0.56%, while Nifty 50 stood at 22,795.90, lower by 117.25 points or 0.51%, with banking, financial, pharma and automobile stocks dragging the market. This performance marked the lowest level for the benchmarks since early June last year and was also fourth consecutive losing streak.

Overall, in the week, the Sensex dipped by 98.93 points or 0.13%, and the Nifty was down by 35.45 points or 0.16%.

Why Sensex, Nifty Fell Last Week?

Explaining, Vinod Nair, Head of Research, Geojit Financial Services said, the market experienced tumultuous sessions, with initial attempts to rally ultimately faltering. The Trump administration's announcement of reciprocal tariffs hit export-oriented industries hard, particularly the pharmaceutical sector, which saw significant underperformance. The auto sector also struggled, facing increased competition due to the opening up to foreign players.

Adding to woes, Nair said, the hawkish stance from the FOMC minutes cast a shadow over the likelihood of further rate cuts, complicating the economic outlook. However, the metal indices found some relief in Chinese steps to revive private investments.

Furthermore, Nair said, India is currently lagging behind its Asian peers, as FII outflows remain high, with the "sell India, buy China" strategy continuing to yield returns for the time being.

What shook market?

Puneet Singhania, Director at Master Trust Group highlighted, among sectoral indices, metals outperformed, emerging as the top gainer, while telecom lagged as the worst-performing sector. Market sentiment was significantly impacted by U.S. President Donald Trump's announcement of reciprocal tariffs on key trading partners. Additionally, corporate earnings remained under pressure, with Nifty 50 companies reporting a modest 5% profit growth in the October-December quarter, marking the third consecutive quarter of single-digit increases. Foreign investor sentiment also remained weak, with approximately $25 billion in FII outflows since the market peak in late September, driven by concerns over high valuations and a slowing economy. India's GDP growth is projected to decelerate to a four-year low of 6.4% this fiscal year, raising apprehensions about corporate profitability and economic stability. Institutional activity reflected net FII outflows of ₹7,793 crore in the cash segment, while DII inflows stood at ₹16,582 crore, offering some support to the market.

How Sensex, Nifty Will Perform From February 24 To February 28:

Nair said, "Investors are keeping a close eye on upcoming pivotal indicators, such as the US Core PCE Price Index and India's GDP growth rate. The market's mood remains cautious, with pessimistic sentiments likely to linger until there is a marked improvement in corporate earnings and a conducive environment with easy global liquidity and stabilised currency."

Meanwhile, a host of macroeconomic data such as GDP data, Housing data, inflation data, infrastructure data and core PCE data will set the tone of market next week. Also, corporate earnings will play a key role.

Puneet Singhania, Director at Master Trust Group highlighted:

- On Wednesday, February 26, US New Home Sales data will be released providing insights on the US housing market and providing information about the sales of new built homes. The US New Home Sales is expected to come at 680k when the data will be released next week.

- On Thursday, February 27, the US GDP Growth Rate (QoQ) Second Estimates for Q4 will be released, providing insights for the expected growth rate of US. The US initial jobless claims data forecasted at 225.0k will also be released.

- India's Infrastructure output for January to be released on Friday, February 28, which is forecasted at 4.5% (YoY) and will be of great importance. In India, infrastructure output refers to a combined index that measures the performance of Eight Core Industries.

- In the evening of Friday, Second Advance Estimates of India's Annual GDP for FY 2024-25 along with Quarterly GDP estimates for Q3 (Oct-Dec) will be released. The estimates will guide near-term market sentiment, upward revisions may lift optimism while downward tweaks could spur caution over growth headwinds.

- Further, the release of US PCE and US Core PCE will be of great significance. For both of the data releases the expected number is at 0.4% (MoM). The US PCE inflation data influences Fed policy expectations, affecting global liquidity and capital flows into Indian markets too.

Technical Outlook:

On Nifty, Singhania said, the 50-scrip benchmark touched its lowest level since June 2024, closing the second consecutive week in negative territory. The index ended slightly below 22,800, signaling weakness in the market. Prices continue to trade below the key 21-day and 55-day EMAs, indicating a bearish trend. Strong selling pressure is expected to persist until Nifty decisively closes above the 23,350 mark. Additionally, both the RSI and MACD indicators remain negative, reinforcing the downtrend. The preferred strategy in this market environment is to sell on rallies. Prices are likely to test the 22,500 and 22,300 levels in the upcoming sessions, reflecting further downside risk.

Ajit Mishra - SVP, Research, Religare Broking added, on the benchmark front, a decisive break below 22,700 in Nifty could trigger the next leg of the downtrend, potentially dragging the index to 22,500 and then 22,000. On the upside, a recovery would first face resistance at 23,150 (20-DEMA), and a breakout above this level could extend gains towards the next major hurdle at 23,600 (200-DEMA).

In case of Bank Nifty, Singhania said that the benchmark closed in negative territory for the second consecutive week, maintaining a bearish trend as prices continue to trade below the key 100-day and 21-day EMAs. The MACD has recently formed a red histogram candle, signaling further downside momentum. Additionally, the RSI stands at 43.41, trading below the 14-day SMA, reinforcing the bearish outlook. Selling pressure is expected to persist unless the index decisively crosses and closes above the 50,000 mark. On the downside, Bank Nifty may likely test the 48,000 level in the upcoming sessions, with a "sell on rise" strategy remaining favorable for traders.

Stocks In Focus Next Week:

Mishra added, "We reiterate our view to focus on banking and IT, as these sectors have shown relatively higher strength during the correction and will be key in determining the market's next directional move."

Lastly, Mishra said, among other sectors, metals and energy indicate further recovery potential, while pharma remains vulnerable to more downside. In the broader market, traders should not read too much into the recent rebound and should use any further recovery to reduce positions while waiting for clear signs of trend reversal.