Up to 33% monthly fall! Battered & bruised IT, auto, pharma stocks have a Trump hand
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A price analysis of the stocks in the aforementioned sectors reveals the rout. At the index level, Nifty IT is the worst performer in February with 11% monthly fall and all the 10 stocks saw their share price erode in the month gone by. The auto sector benchmark Nifty Auto declined 8% over a month while the Nifty Pharma is down 5%.
IT stocks performance snapshot
Midcap IT counter Mphasis has fallen by 22% and is followed by LTIMindtree and Tata Consultancy Services (TCS) which are down by 18% and 14%, respectively. Others like Coforge, L&T Technology Services (LTTS), Persistent Systems, Tech Mahindra, Wipro, Infosys and HCL Technologies have declined between 13% and 7%.
A US economic slowdown is likely to have an adverse impact on the Indian IT sector which has a high business stake in the country.
Nuvama Institutional Equities is of the view that if tariffs and DOGE dominate, US recession risks could escalate, triggering a global risk off. "The tariffs would affect the US economy itself through weaker consumer sentiments. It is worth noting that the US household inflation expectations both 1Y and long term have spiked in recent months owing to the expectations of higher tariffs. Furthermore, consumer sentiments too have weakened. This lowers the elbow room for the Fed and also potentially erodes household sentiments and spending power," the brokerage said.
Also Read: Midcaps hammered in February, plunge up to 30%. IREDA, Delhivery among biggest losers
Auto stocks’ performance
For domestic auto stocks, investors’ fears lie on Tesla entry into India. The US electric vehicle giant has finalised a deal to open its first showroom in Mumbai's Bandra Kurla Complex (BKC), in what is probably the highest lease rent for a commercial space, a TOI report said.
Prior to this, the Indian government had cut import duty not just for big motorcycles with engines above 1,600cc, but even for small ones. This move is being seen to up the competition in the domestic market for the premium segment.
Auto ancillary stocks were punished the most. Bharat Forge was the biggest loser, falling by 17% and is followed by Tata Motors (-15%) and Samvardhana Motherson (-14%). Others like Bosch, Mahindra & Mahindra (M&M), Hero MotoCorp, MRF, Eicher Motors, Bajaj Auto, TVS Motor, Balkrishna Industries and Maruti Suzuki fell up to 11%. Exide Industries and Ashok Leyland were outliers, gaining up to 4%.
Gurmeet Chadha, CIO & Managing Partner at Complete Circle Consultants, believes the market reaction is exaggerated: “Markets are overreacting, but this is a time to look at some names where the reaction has been more negative just from the news point of view. Somebody like a Tesla coming will boost the premiumisation of the car story. It is a win-win if an innovator comes.”
Chadha’s view aligns with historical trends—whenever a major global player enters a new market, stocks of incumbents initially decline before stabilizing. Tesla’s arrival could actually accelerate the adoption of electric vehicles (EVs) in India, benefiting local automakers already investing heavily in the segment.
Pharma sector woes
In the pharma pack, the biggest fall has been witnessed in Natco Pharma which has declined 33% in the past one month and is followed by Biocon, Torrent Pharmaceuticals and Granules India, each falling in double-digits. Meanwhile, Glenmark Pharma, Aurobindo Pharma, Mankind Pharma, Sun Pharma, Lupin, Alkem Labs, Dr. Reddy's Lab, JB Chems, Zydus Lifesciences, Ajanta Pharma, Ipca Laboratories and Cipla fell between 9% and 1%.
Not all were losers as Divi's Laboratories, Laurus Labs, Gland Pharma and Abbott India have managed positive returns of up to 18%.
To give some perspective, India’s total medicine exports stood at $28 billion (approximately Rs 2.45 lakh crore) in FY24 out of which the US accounted for $8.7 billion (Rs 76,000 crore) according to a CareEdge data. India imports medicines worth nearly $800 million (Rs 7,000 crore) from the US, indicating a lopsided trade.
"Last year, India reduced import duties on oncology products worth $200 million and this year, it is estimated to cut duties on a few more oncology products worth $300-400 million," the a CareEdge note said, while emphasising that the potential impact of a reciprocal tariff reduction is expected to be low on the Indian drug makers.
March series outlook
Nuvama said that it does not expect a sharp recovery in March, as cash volumes show no signs of picking up, indicating weak buying interest. Persistent FII selling is unlikely to ease soon, it said while expecting the Nifty to stay volatile.
What is worse is that March seasonality is also not in favour of either auto or IT sectors. In the last 10 years, Nifty IT has closed negative on six occasions with average returns of negative 1%. Meanwhile, auto is the worst performing sector with average negative returns of 2.6% in March over the last 10 years.
As for pharma, the seasonality is evenly split with five positive closings in the last decade. The average returns are 0.4%.
Also Read: After Nifty records its 5th successive monthly fall in Feb, can March seasonality pull it out of woods?
As far as the overall sentiments go, Nirmal Bang expects the broader market to stabilise and may see some bounce back in March series. It expects Nifty to be in the range of 21,900 to 22,800 in March Series.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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