India’s Inflation Cools, But Market Slips as Global Headwinds Hit Sentiment

Updated: February 12, 2025 22:52

Image Source: Business Today

On February 12, 2025, the Indian stock markets experienced a downturn, influenced by global trade tensions and domestic earnings reports.

Indian Stock Market Summary:

Benchmark Indices: The BSE Sensex declined by approximately 1%, closing at 76,171.08 points, while the NSE Nifty 50 fell by 0.12% to end at 23,045.25, with a modest recovery from day's low across all indices.

Sector Performance: All major sectors recorded losses. Notably, the smallcap and midcap indices faced significant declines, with the smallcap index entering bear market territory after a 20% drop from its December peak.

Top Gainers: Bajaj Finserv led the gains, rising 2.72% to ₹1,792.25. Other gainers included SBI Life Insurance, Shriram Finance, HDFC Life, and Tata Steel.

Top Losers: Mahindra & Mahindra (M&M) was the top loser, falling 3.2% to ₹2,987.10. Eicher Motors, Bharat Electronics Ltd (BEL), Power Grid Corporation, and IndusInd Bank also saw notable declines.

International Stock Markets:

United States: U.S. stock markets declined following a report indicating worsening inflation. The S&P 500 fell by 0.9%, the Dow Jones Industrial Average dropped 418 points, and the Nasdaq Composite decreased by 0.8%.

Europe: European markets continued setting records, buoyed by positive corporate earnings.

Asia: Asian markets witnessed a strong day with Japan, Australian and Chinese markets posting gains and ending the day in green.

Inflation Data and Global Economy:

India’s Ministry of Statistics and Programme Implementation reported key economic indicators for January 2025:

Inflation (CPI): Overall inflation dropped to 4.31% (a five-month low) from 5.22% in December. Food inflation declined significantly to 6.02% from 8.39%, driven by lower prices of essentials like vegetables and cereals. Rural inflation (4.64%) remained higher than urban (3.87%).

Industrial Production (IIP): Industrial output grew 3.2% in December 2024, the slowest in four months, due to weaker manufacturing growth (3.0%). Electricity (6.2%) and mining (2.6%) showed moderate expansion.

These trends indicate easing inflation, particularly in food prices, and a steady but moderate industrial recovery. The lower inflation may allow the RBI to consider monetary policy easing to support economic growth.

United States: Inflation unexpectedly rose to 3% in January, up from 2.9% in December, surpassing market expectations. This increase may delay anticipated interest rate cuts by the Federal Reserve.

Overall, global financial markets are navigating a complex landscape of rising inflation, trade tensions, and policy uncertainties, leading to cautious investor sentiment.

Source: Reuters, AngelOne, APNews, The Guardian, pib.gov.in

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