An attempt has been made to manufacture iron-based shape memory alloy (FeSMA) through the wire-arc additive manufacturing (WAAM) route, which is classified as direct energy deposition (DED) type additive manufacturing. A metal powder-cored wire was used as feedstock to deposit the alloy. An on-the-shelf plasmatransferred arc (PTA) welding torch coupled with an industrial robot was used in the process. Severe hot cracking issue was observed during the deposition process. Vertical cracks, along the build direction, appeared during the solidification of the deposited layer. As a crack appeared at a location, it continued progressing upward by fracturing any subsequent layers. Thereby, it was impossible to do any effective repair work to stop the cracking process. It was found that the cracks were closely aligned with the non-equilibrium secondary phase formed due to severe solute segregation. Measurement of the localised chemical composition of the primary and secondary phases revealed oxygen ingression in both, along with a significant solute enrichment in the secondary phase. The change in the localised composition led to a wider solidification range and higher kinematic viscosity in the molten secondary phases. The wider freezing range in the secondary phase might be responsible for the nucleation of micro-cracks during the end stage of solidification. Along with that, the higher kinematic viscosity of the solute-rich molten alloy (corresponding to secondary phase chemistry) prevented the liquid phase from filling up the micro-cracks and healing the defects. Further to it, high residual stress in the longitudinal direction acted perpendicular to the fracture plane, thus helping them to grow and coalesce together to form macro-cracks. As a result, the alloy was embrittled, severely compromising the structural integrity of the deposit. Machine hammer peening (MHP) on each newly deposited layer was deployed as a cracking mitigation strategy, which altered the process stress field as well as the microstructure and crystallographic texture of the deposit. The MHP reduced the detrimental cubic texture and increased the fraction of low-angle grain boundaries and Sigma 3 boundary significantly and thus made the alloy resistant to fracture.