India Market Report: Strong Domestic Demand Supports Growth

Nifty Next 50 Leads February Gains as Midcaps Outperform on Annual Basis​

Strong Monthly Performance Driven by Broader Market Indices​

New Delhi, March 17: The Nifty Next 50 index emerged as the top performer in February, rising 2.76 per cent during the month and delivering a robust 22.16 per cent return over the past year, according to a report released by Motilal Oswal Mutual Fund on Tuesday.

The broader market also showed resilience, with the Midcap 150 index posting a one-year gain of 23.08 per cent, while the Nifty Smallcap 250 advanced 14.71 per cent over the same period.

On a monthly basis, mid-cap and small-cap indices recorded gains of 1.66 per cent and 0.75 per cent, respectively, indicating continued investor interest beyond large-cap stocks.

Nifty 50 Faces Short-Term Pressure Despite Annual Gains​

In contrast, the benchmark Nifty 50 index declined 0.56 per cent in February and fell 3.91 per cent over the past three months. However, it maintained a positive trajectory on an annual basis, rising 13.80 per cent over the year.

Sectoral Trends Highlight Consumption Strength and IT Weakness​

Sector-wise, Consumer Durables, Auto, and Energy led the gains in February, rising 9.30 per cent, 5.27 per cent, and 5.43 per cent, respectively.

The report highlighted that strong domestic demand and margin tailwinds supported consumption-driven sectors. On the other hand, the IT sector saw a sharp decline of 19.54 per cent, reflecting concerns around global economic growth.

Metal stocks gained 3.49 per cent during the month, while the defence sector recorded a marginal decline of 0.70 per cent.

Defence, Metals, and Auto Shine on Annual Basis​

Over a one-year horizon, defence, metals, and auto sectors stood out as top performers, delivering returns of 58.36 per cent, 48.93 per cent, and 37.37 per cent, respectively.

Factor Performance Shows Value Dominance​

The value factor continued its upward momentum with a 5.9 per cent gain in February, extending its strong run to approximately 43 per cent over the past year.

While quality declined during the month, and momentum and low volatility factors ended lower in January, all these factors remained positive on an annual basis.

Inflation and FII Inflows Support Market Sentiment​

Inflation in India rose to 2.75 per cent in January, entering the Reserve Bank of India's target range of 2 to 4 per cent for the first time since August, providing support for policy stability.

Foreign Institutional Investors recorded net inflows of Rs 37,804 crore in February, including Rs 22,615 crore in equities, signalling renewed confidence in India’s macroeconomic stability and growth outlook.