FIIs Trigger Massive Market Sell-Off: Nifty Records Worst February Since COVID-19
Indian equity markets witnessed a significant downturn on Friday as Foreign Institutional Investors (FIIs) offloaded shares worth a staggering Rs 11,639 crore, marking their highest single-day selling in February. This massive sell-off triggered a sharp decline in benchmark indices, with the Nifty plunging 420 points and the Sensex tumbling over 1,400 points.
FII Selling Spree Continues Throughout February
The selling pressure from foreign investors has been relentless throughout February, with FIIs being net sellers to the tune of Rs 34,574 crore for the month. Out of 20 trading sessions in February, FIIs were buyers on just two occasions:
- February 4: Purchased shares worth Rs 809.2 crore
- February 18: Bought domestic shares worth Rs 4,786.6 crore
Despite Domestic Institutional Investors (DIIs) stepping in with purchases worth Rs 12,308.63 crore on Friday, their support wasn't sufficient to prevent the market rout.
Market Carnage: Key Indices Record Steep Declines
The market carnage was evident across all major indices:
- Nifty closed at 22,124.70, plummeting by 420.35 points or 1.86%
- BSE Sensex tanked 1,414.33 points or 1.90% to close at 73,198.10
- BSE-listed companies saw their market capitalization erode by approximately Rs 9 lakh crore in a single day
The selling pressure was widespread, with 2,416 stocks closing in negative territory out of the 2,972 stocks traded on the NSE. Only 489 stocks managed to advance, while 789 stocks hit their 52-week lows.
IT and Auto Sectors Bear the Brunt
Sectoral performance highlighted the breadth of the sell-off:
- Nifty IT plunged by 4.2%
- Nifty Auto declined by 3.9%
- All 16 sectors closed in the red
The sharp decline in IT stocks was particularly notable, with the sector facing significant selling pressure amidst concerns about US economic growth.
Nifty Records Worst February Since COVID-19
The Nifty index recorded its worst February performance since the COVID-19 pandemic, ending the month with cuts of 5.9%. This decline comes close to the 6.4% drop witnessed in February 2020, just before the nationwide lockdown.
For comparison:
- February 2020: -6.4% (COVID-19 onset)
- February 2021: +6.6% (highest February returns)
- February 2022: -3.2%
- February 2023: -2%
- February 2024: +1.2%
- February 2025: -5.9% (current)
US Economic Concerns Weigh on Market Sentiment
Market analysts attribute the sell-off partly to concerns about the US economy, which grew at a slower pace of 2.3% in the last quarter compared to the 3.1% growth in the July-September quarter. The slower growth in the world's largest economy has amplified worries about global economic health.
Additionally, market sentiment has been affected by what analysts are referring to as the "Trump factor," contributing to the massive sell-off across sectors, with IT, auto, and pharma stocks being hit particularly hard.
Technical Outlook and Support Levels
According to Rupak De, Senior Technical Analyst at LKP Securities, "Nifty remains in the bearish zone. In the near term, Nifty is expected to find support around 21,800-22,000." He further noted that a sustained move above 21,800 could lead to a significant recovery, while failure to hold this level may trigger another sharp decline.
Market participants will be closely watching these support levels in the coming sessions to gauge whether the current downturn represents a buying opportunity or signals more pain ahead.
Looking Ahead: March Seasonality
With Nifty recording its fifth successive monthly fall in February, investors are now looking to March seasonality patterns for potential relief. Historically, March has shown varied performance patterns, and market participants will be keen to see if seasonal trends can help pull the index out of its current bearish phase.
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