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Indian equity benchmarks are likely to get a cautious start as investors wait for clarity on U.S. President Donald Trump's trade policies and eagerly await the outcome of Ukraine peace talks. Investors will also be keeping an eye on the February's manufacturing and services PMI flash data, along with the RBI MPC minutes, to be release later in the day.

Some of the key factors to be watched:

Sustained foreign fund outflows: Foreign Institutional Investors (FIIs) sold India stocks worth Rs 3,311.55 crore on Thursday, February 20, 2025.

India's growth will slow to 6.4 per cent in 2025: Moody's Analytics on Thursday said India's growth will slow to 6.4 per cent in 2025, from 6.6 per cent in 2024, as new US tariffs and softening global demand weigh on exports.

Govt committed to create conducive environment for biz growth, innovation: Commerce and Industry Minister Piyush Goyal has said that the 20 industrial smart cities are being developed, which reaffirms the government’s commitment to creating an advanced industrial ecosystem that caters to global investors and businesses.

India set to become high-income country by 2047 buoyed by services sector: A private report indicated that India is set to become a high-income country by 2047 with a projected GDP of $23 trillion to $35 trillion, buoyed by the services sector.

Automotive component industry stocks will be in focus: Credit rating agency ICRA said the Indian automotive component industry is expected to maintain a steady growth trajectory and expand by 8-10 per cent in FY26 amid speculation about a possible 25 per cent tariff imposition on imports by the US. 

On the global front, The US markets ended lower on Thursday as a disappointing forecast from the world’s largest retailer added to concern about the economy’s main engine. Asian markets are trading mostly higher on Friday led by Chinese technology shares, after Alibaba Group posted its fastest revenue growth in over a year, boosting investor sentiment.

Back home, Indian equity benchmarks erased most of their losses but ended marginally lower on Thursday as fresh tariff threats, weak Asian markets and foreign fund outflows hurt investors' sentiment. Finally, the BSE Sensex fell 203.22 points or 0.27% to 75,735.96, and the CNX Nifty was down by 19.75 points or 0.09% to 22,913.15.

Some of the important factors in trade:  

Global economy continues to grow at steady but moderate pace: The RBI in its latest monthly bulletin-February 2025 said that the global economy continues to grow at a steady but moderate pace, with divergent outlook across countries amid rapidly evolving political and technological landscapes.

Trump's tariff talks continued to impact markets: Trump's declaration that the US will impose 25% tariffs on automobiles, semiconductors and pharmaceuticals impacted India's pharma stocks since India's leading pharma companies are major exporters to the US. 

Indian rupee gained strength: Indian rupee appreciated 34 paise to trade at 86.64 (provisional) against the US dollar, supported by the weakening of the American currency in the overseas market.

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