Sensex, Nifty end flat for 3rd session; heavyweights offset pharma losses; broader market rise up to 2%

Sensex and Nifty ended flat for the third session in a row ahead of the FOMC meeting minutes, set for release later tonight, which could shape market expectations on U.S. interest rates— a crucial factor influencing global investor sentiment.

At close, the Sensex was down 28 points or 0.04 percent at 75,939, and the Nifty was down 12 points or 0.05 percent at 22,932. About 2,724 shares advanced, 1,079 shares declined, and 107 shares were unchanged.

The benchmarks had started the day on a weak note as investors grew cautious over stretched valuations in domestic equities and global trade uncertainties. Adding to the jitters, U.S. President Donald Trump announced plans to impose 25 percent tariffs on auto, semiconductor, and pharmaceutical imports— a move that could disrupt international trade and send ripples across global markets.

Indices were marginally up in the second half of the trading session, buoyed by gains in heavyweights like ICICI Bank, L&T, and HDFC Bank. A strong rebound in the broader markets further supported the upmove, with the BSE Midcap index rising over 1 percent and the BSE Smallcap index climbing more than 2 percent.

While the pharma tariffs could impact sentiment in the short to medium term, analysts believe the effect may not be long-lasting.

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"Over the past year, the pharma index has outperformed, and most Indian pharma stocks derive 60 to 80 percent of their revenue from the North American market. With these new tariffs, there will be an immediate short- to medium-term impact. However, the Trump administration has consistently focused on tariffs, which will likely increase inflation and healthcare costs in the U.S. Since healthcare is a top priority, any rise in costs could have unintended economic consequences," said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities.

He added that building domestic pharmaceutical infrastructure in the U.S. overnight is impractical, and pharma enjoys inelastic demand—meaning consumption remains stable despite price changes. "So, while there may be temporary pressure, the long-term impact may be limited."

Citi Research pointed out that organic and miscellaneous chemicals currently face a 10 percent tariff in India compared to 3 percent in the U.S., while key exports to the U.S. and EU are taxed at 5-6 percent. The firm estimated that a 7 percent tariff on Indian exports to the U.S. could dent EBITDA by 12 percent for PI Industries, 5 percent for Navin Fluorine, and 4 percent for SRF.

Beyond pharma, the impact on Indian automobile exports appears minimal. "While India exports vehicles, major players like Tata Motors ship around 20,000 Jaguar Land Rover (JLR) units to the U.S., but these exports are routed through Europe and the UK, not directly from India. As a result, the tariffs may not significantly affect Tata Motors," said Ravi Diyora, Director of Research at Kunvarji Group.

Similarly, India's exposure to semiconductor exports remains relatively small. "When it comes to semiconductors, India has limited exposure to U.S. exports, unlike Taiwan, which has a much larger footprint. Interestingly, Taiwan’s markets have not reacted strongly—they remain marginally in the green—indicating muted global panic over this development," pointed out Diyora.

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V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted another challenge for India—rising competition for foreign capital. "News of Chinese authorities encouraging their top businessmen to invest is another headwind for India since Chinese stocks are cheap and may attract big inflows from FIIs, which means FIIs might continue selling in India."

So far in February, FIIs have offloaded Indian equities worth Rs 28,335 crore.

"FIIs will start buying when the dollar depreciates and the US bond yields start coming down. This might take time. A strong fundamental factor that can turn FIIs into buyers is indication of earnings recovery in India. This is likely in early FY26. High frequency indicators might suggest a turnaround in growth and earrings soon," Vijayakumar added.

Sectorally, nine of the 13 major sectoral indices closed in green. Financial services and construction led the gains, while IT and telecom lagged. IT firms, which derive a substantial portion of their revenue from the U.S., closed 1.3 percent lower.

On the Nifty 50, Dr Reddys, TCS, Infosys, HUL, and Adani Enterprised were the biggest losers, falling 2-3 percent, while BEL, Hindalco, Eicher Motors, L&T, and Axis Bank were the top gainers, rising 2-4 percent.

Adani Enterprises slumped nearly 2 percent after reports that the U.S. SEC had sought assistance from India’s Justice Department in its investigation into Gautam Adani and his nephew.

Among stock-specific movers, Nava shares surged almost 12 percent after the board approved a buyback of up to Rs 360 crore at Rs 500 per share. Arkade Developers climbed over 3 percent after signing a development agreement for a Mumbai project with a gross development value of Rs 740 crore.

IT services firm Hexaware Technologies made a strong market debut, listing at a premium to its IPO price range on both the BSE and NSE. The stock opened at Rs 731 on the BSE compared to the issue price range of Rs 674-Rs 708, while on the NSE, it began trading at Rs 745.5, marking a 5.3 percent premium.

"The key level to watch for Nifty is 23,000," said Bathini. "If Nifty holds above this level, we could see an uptrend. However, if it falls below 23,000, additional selling pressure could emerge."Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.