Market Notes - 11th February

The Indian stock market tumbled on February 11, 2025, with the **Sensex plunging 1,018 points (1.32%) to close at 76,293.60** and the **Nifty 50 dropping 310 points (1.32%) to end at 23,071.80**. This marked the fifth consecutive day of losses, driven by widespread selling across sectors. https://preview.redd.it/53lrwlvriiie1.png?width=1455&format=png&auto=webp&s=c589dc1b3730e9943ea3833913fa02c26b387ac5 All sectoral indices ended in the red, with **Nifty Auto, FMCG, IT, and Metal falling 2-3%**. The broader markets were hit even harder, as the **Midcap index fell 3% and Smallcap index dropped 3.5%**. Market sentiment remained bearish, with over ₹10 lakh crore wiped out in market capitalization. Foreign Institutional Investors (FIIs) continued their selling spree in 2025, further pressuring the markets. Among stocks, **Apollo Hospitals, Eicher Motors, and Coal India** were the top losers on Nifty, while **Adani Enterprises and Bharti Airtel** managed to gain. **Broader Developments:** **RBI’s Liquidity Boost:** RBI has announced plans to **double its government securities purchase** to Rs 40,000 crore under the upcoming open market operation on February 13, up from the previously announced Rs 20,000 crore. This move aims to **address the persistent liquidity deficit in the banking system**, which has lasted for eight consecutive weeks and currently stands at Rs 1.33 lakh crore. The decision follows the **RBI's recent 25 basis point cut in its key interest rate** to stimulate the economy, although no immediate liquidity-boosting measures were announced at that time. RBI Governor Sanjay Malhotra has committed to monitoring financial market conditions and taking appropriate actions to maintain orderly liquidity. The central bank has already injected over Rs 1.5 lakh crore through various measures, including bond purchases, currency swaps, and repo auctions. The market seemed to have paid no heed to this news and the broader sell off continued even after the announcement. **FICCI's 61st Quarterly Survey on Manufacturing (QSM)** The survey highlights sustained growth in India's manufacturing sector during FY 2024. Key findings include: * **Production & Orders**: 87% of respondents expect higher or stable production in Q4 FY 2024, up from 73% in Q3. Additionally, 85% anticipate more orders. * **Capacity Utilization & Investment**: Average capacity utilization remains steady at 73%, with over 50% planning investments in the next six months. Paper & Paper Products leads at 90%, while Electronics & Electricals is lowest at 65%. * **Inventories & Exports**: 84% expect stable or higher inventories in Q4, and 40% foresee export growth compared to last year. * **Hiring & Interest Rates**: About 40% plan workforce expansion, while the average borrowing rate is 9.3%, with repo rate hikes increasing costs for some. * **Sectoral Growth**: Strong growth (10-20%) is expected in Electronics & Electricals and Machine Tools, while other sectors anticipate moderate growth (5-10%). * **Challenges**: Rising production costs, raw material issues, skilled labor shortages, and high power costs persist. Despite challenges, the sector shows optimism with stable demand, investment plans, and export growth. **Expert Talks:** **S. Naren from ICICI AMC recently shared his views on the market and investment strategies. Here are some key takeaways:** # Focus on Asset Allocation Naren stressed that **how you divide your money across different assets matters more than picking the right stocks**—it drives nearly 80% of wealth creation. ICICI AMC has been pushing for disciplined asset allocation for the past 18 months. He also believes most investors should **stick to moderate-risk products rather than taking extreme risks.** # Be Careful with Small and Mid-Cap Stocks Right now, Naren is **cautious about small and mid-cap stocks.** He pointed out that: * Many of these stocks are **expensive** and there’s a lot of money flowing into them. * The **quality of new stocks entering the market is questionable.** * While some small companies do grow big, the reality is **most investors don’t hold them long enough** to benefit. # What’s Attractive in the Market Right Now? Naren admitted that **finding undervalued investments isn’t easy right now.** However, a few areas look interesting: * **Bank fixed deposits (FDs), debt mutual funds, and commercial properties**—these haven’t performed well in recent years, so they may have value. * **Large-cap stocks aren’t in a bubble, but they aren’t cheap either.** # Advice for Investors Naren had some straightforward advice: * **Understand the risks** of what you’re investing in before putting in your money. * **Avoid loss-making companies** with high valuations—especially if you’re a new investor. * **Start with hybrid funds** (a mix of debt and equity) before jumping straight into equity funds. # What’s Happening Globally? On the global front, Naren admitted things are **uncertain.** He’s especially watching the **long dollar trade**—if and when it peaks, it could shake things up. The **U.S. market is tricky right now** with frequent policy changes, making it even harder to predict. Given all this, he suggests **taking a balanced, moderate-risk approach.** # Are We at the Peak of the Market Cycle? Naren thinks **we might have hit the peak of the last cycle**, considering how easily loss-making companies have been able to raise money. But that doesn’t change India’s long-term growth story—**the country still has a bright future.** # Final Thoughts At the end of the day, Naren’s message was simple: **focus on managing risk, follow a disciplined asset allocation strategy, and keep your expectations realistic.** **Watch the complete interview here:** [**https://youtu.be/SX6kZ0LYa-Y**](https://youtu.be/SX6kZ0LYa-Y) Read the detailed blog here: [https://sabiduriacapital.substack.com/p/market-notes-11th-february](https://sabiduriacapital.substack.com/p/market-notes-11th-february)