Walmart’s Cautious Outlook and FII Selling Shake India’s Market

In the week gone by, the global stock market experienced volatility largely due to cautious guidance from Walmart’s forecast. In this blog, we’ll know in detail what happened last week (February 17, 2025 to February 21, 2025) all across the globe.

Fear in Consumer Spending

The weaker outlook from the first major retailer to report earnings this year raised concerns about consumer spending, which had already been impacted by a larger-than-expected decline in U.S. retail sales for January.

Walmart’s disappointing forecast amplified worries about the health of the economy’s primary driver, consumer spending. Additionally, markets were already on edge as they waited for President Trump’s next move, following his clash with Ukraine’s president, which heightened geopolitical tensions.

US Fed Meeting

On a separate note, minutes from the U.S. Federal Reserve’s January policy meeting revealed that Trump’s initial policy proposals had sparked inflationary concerns within the central bank.

Meanwhile, data showed a moderate increase in the number of Americans filing for unemployment benefits, suggesting the labor market remains stable. U.S. industrial production grew by 0.5% in January 2025, slower than the 1.0% increase seen in December 2024.

UK’s Inflation Trend

European stock markets reached new heights, benefiting from positive geopolitical developments, defense budget discussions, and hopes of economic growth from peace talks.

In the UK, December’s annual inflation rate edged down to 2.5%, from 2.6%, while the core inflation rate dropped to 3.2% YoY from 3.5%, below the expected 3.4%. January’s headline inflation is expected to rise to 2.8%, as the dip in airfare prices reverses and a new VAT on private school fees comes into effect.

This is likely to keep the Bank of England’s interest rates unchanged until its next meeting in May.

Japan’s Steps to Curb Inflation

In Japan, core consumer inflation reached 3.2% in January, marking the fastest pace in 19 months, reflecting persistent inflationary pressure above the central bank’s 2% target.

The Bank of Japan raised its short-term interest rate to 0.5% from 0.25% in January, its highest level in 17 years to curb rising inflation. Japan’s economy grew at an annualized rate of 2.8% in the final quarter of 2024, driven by strong business expenditure and consumption, supporting the case for further rate hikes.

Additionally, Japan’s Flash Composite Output Index rose to 51.6 in February 2025, up from 51.1 in January 2025. However, Japan’s industrial production saw a decline of 1.6% YoY in December 2024, an improvement from the 2.7% decline in November, though still below the initial December estimated decline of 1.1%.

FII Selling in India

Back at home, the domestic stock market has been quite volatile, with investor confidence remaining weak due to worries about possible U.S. tariffs and ongoing foreign selling. Since the start of 2025, foreign investors (FIls) have sold nearly ₹1.20 lakh crores worth of shares in India.

In FY2025, constant selling by the FIls and sharp price correction led to a decline in the FlI’s assets under custody (AUC) value to ₹67.76 lakh crores in January 2025 from its peak of ₹77.96 lakh crores in September 2024 and its lowest level since June 2024 level of ₹71.44 lakh crores. This month alone, foreign investors have sold ₹0.34 lakh crores worth of Indian stocks.

Conclusion

Going forward, the market would closely monitor President Trump’s new tariff policies and their ripple effects on inflation, as well as progress in peace negotiations regarding geopolitical conflicts in both West Asia and the Russia-Ukraine situation. So, open a free Demat account with SMC Global Securities and invest as per your investment objective and risk profile.

Reference:
SMC Global Securities’ Research Team

Author: All Content is verified by SMC Global Securities.