Indian Stock Market Faces Downturn Amid FPI Withdrawals and Rising GST Collections in February 2025

The Indian stock market is experiencing a downturn, with the Nifty dropping 5.88% in February. The BSE Sensex, comprising 30 shares, has decreased by 4,302 points or 5.55% during the same period. From its peak of 85,978.25 on September 27 last year, the Sensex has plunged by 12,780.15 points or 14.86%. Similarly, the Nifty has fallen by 4,152.65 points or 15.80% from its record high of 26,277.35 on September 27, 2024.

Foreign portfolio investors (FPIs) have been selling off Indian equities, withdrawing Rs 34,574 crore in February alone. This brings total withdrawals to Rs 1.12 lakh crore for the first two months of 2025. The primary reasons for this trend are rising global trade tensions and concerns about corporate earnings growth.

Vinod Nair from Geojit Financial Services suggests that investors will focus on tariff policies and unemployment claims. He predicts weak market conditions in the short term but expects a gradual recovery with better company results in the next financial year's first quarter and reduced global trade uncertainty.

Siddhartha Khemka from Motilal Oswal Financial Services Limited notes that global uncertainties and a lack of domestic indicators are expected to keep the market weak. GDP growth was at 6.2% in the December quarter, showing recovery from a seven-quarter low but remaining weak annually.

GST collections rose by 9.1% to approximately Rs 1.84 lakh crore in February due to increased domestic consumption. Official data shows Rs 35,204 crore collected from central GST, Rs 43,704 crore from state GST, Rs 90,870 crore from integrated GST, and Rs 13,868 crore from compensation cess.

Auto sales figures for February are crucial as they reflect market conditions. A slowdown and declining demand led to sluggish sales for auto companies during this period. Maruti Suzuki experienced a slight increase in sales, while companies like Hyundai and Tata Motors saw significant declines.

The Indian stock market's current bearish trend is influenced by various factors including FPI withdrawals and global uncertainties. However, there are signs of potential recovery with improved company results and increased GST collections indicating rising domestic consumption.