Indian Market Deep Dive: February 14, 2026

Introduction

The Indian stock market navigated a period of intense volatility during the week ending February 14, 2026. This period was characterized by a paradoxical narrative: a violent wealth destruction in the information technology sector contrasted against the first meaningful return of foreign capital in months. As the Nifty 50 and BSE Sensex faced downward pressure, structural reforms in inflation measurement and derivatives access signaled a maturing financial ecosystem.

For retail investors, this week offered a masterclass in sector rotation and the impact of technological disruption. While the "AI Apocalypse" narrative haunted software services, macroeconomic stability was bolstered by a revised inflation series and progress on a landmark India-US trade deal. This article breaks down the complex data points and policy shifts defining the current market landscape.

The AI Apocalypse: IT Sector's Existential Crisis

₹5.7 Lakh Crore Wealth Destruction in Eight Sessions

Indian Information Technology (IT) stocks faced a historic rout, with the Nifty IT index plummeting 8.2% during the week. This extended the sector's year-to-date losses to a staggering 13.7%. In just eight trading sessions, 10 major companies witnessed a market capitalization erosion of approximately $50 billion (₹5.7 lakh crore).

This selloff, termed the "Anthropic shock," stems from growing fears that advanced Generative AI will permanently dismantle the traditional "billable hours" revenue model. Analysts suggest that if AI-driven automation can accelerate project timelines by 30-50%, Indian firms may struggle to maintain their current revenue streams and export competitiveness.

Global Tech Contagion

The carnage was not limited to domestic shores. The Nasdaq Composite fell 2% as Cisco Systems reported lower-than-estimated margins, fueling fears of margin compression across the global tech value chain. Indian bellwethers Infosys and Wipro saw their American Depositary Receipts (ADRs) crash 14% over two sessions before a minor 4% recovery.

Hiren Dasani, CIO for Emerging Markets at Whiteoak Capital, noted that the market is currently pricing in the uncertainty of whether software firms can retain productivity gains or if those gains will be passed entirely to clients, eroding corporate profits.

Foreign Capital's Cautious Return: ₹14,160 Crore Inflow

In a significant reversal of a three-month exodus, Foreign Portfolio Investors (FPIs) became net buyers, injecting ₹14,160 crore during the week. This follows a brutal January where ₹35,962 crore exited the market.

Daily FPI Activity Breakdown

Note: The equity segment attracted ₹11,546 crore, while debt received ₹2,896 crore. Hybrid instruments saw an outflow of ₹1,147 crore.

While the trend is positive, experts like Dr. V.K. Vijayakumar of Geojit Investments caution that sentiment remains fragile. On February 13, FPIs sold ₹7,395 crore as the Nifty crashed 336 points, indicating that the return is a cautious reallocation rather than a structural reversal. Much of the optimism is tied to the India-US trade deal, which includes a proposed $500 billion purchase of US goods by India in exchange for tariff cuts on textiles and auto components.

Policy Innovation: New Inflation Metrics and Midcap Derivatives

Revolutionary CPI Series with 2024 Base Year

India has officially transitioned to a revised Consumer Price Index (CPI) with 2024 as the base year. The new series reveals that January retail inflation stood at 2.75%, compared to 1.33% in December under the antiquated 2012 series.

Key changes in the inflation calculation include:

• Food Weightage Reduction: Dropped from 46% to approximately 37%.
• Expanded Categories: Spending categories increased from 6 to 13.
• Modern Consumption: Inclusion of e-commerce, digital streaming, and shared mobility services.

V. Anantha Nageswaran, Chief Economic Adviser, suggested that this shift allows the RBI to focus more on core demand pressures rather than being reactive to volatile food prices. This likely points toward an extended interest rate pause at the current 5.25% repo rate.

BSE Focused Midcap Derivatives

The BSE received SEBI approval to launch derivatives on its Focused Midcap Index, which tracks the top 20 mid-sized companies.

• Contracts: Monthly index futures and options.
• Strategy: Provides a tactical tool for institutional hedging in the high-growth midcap segment.
• Regulation: Per SEBI mandates, this will focus on monthly expiries to prevent the excessive speculation often seen in weekly expiry products.

India as a Global AI Governance Leader

From February 16-20, 2026, New Delhi will host the India-AI Impact Summit at Bharat Mandapam. The event will see participation from 20 heads of state, including French President Emmanuel Macron and Brazilian President Lula da Silva.

The summit is built on three Sutras:

1. People: Human-centric AI development.
2. Planet: Environmental sustainability of compute infrastructure.
3. Progress: Inclusive economic growth.

This summit is a strategic move by the Indian government to shape global AI norms, ensuring that the technology serves public benefit rather than just commercial or military interests. It also coincides with President Lula's state visit, where a 260-company delegation aims to hit a $20 billion bilateral trade target, focusing on critical minerals and pharmaceuticals.

IPO Pipeline and Corporate Action Highlights

Mega Listings on the Horizon

• NSE IPO: The National Stock Exchange has appointed Rothschild & Co as an independent advisor for its long-awaited $2.5 billion IPO. This will be an Offer-for-Sale (OFS) by existing shareholders.
• InsuranceDekho: Planning a $250 million Mumbai listing. The firm has raised $358 million to date from backers like BNP Paribas Cardif.
• Muted Debuts: Fractal Analytics (subscribed 2.66x) and Aye Finance (subscribed 1.04x) saw poor grey market responses, trading at a 1.22% discount and a negligible 0.27% premium, respectively.

Corporate Earnings and Dividends

Delphi World Money also performed a unique corporate action on Valentine's Day, setting a record date for a 5:1 share split and a 2:1 bonus issue to improve retail liquidity.

Market Sentiment and Technical Outlook

As of February 13, 2026, benchmark indices are testing critical support levels. The Nifty 50 closed at 25,471.10 (-1.30%), while the Sensex ended at 82,626.76 (-1.25%). The India VIX (volatility index) rose to 13.3, signaling increased nervousness.

Technical Support & Resistance:

• Nifty Support: 25,300 – 25,500
• Nifty Resistance: 25,800 – 26,000
• Bank Nifty Support: 60,000

In commodities, 24-carat gold surged by ₹1,970 to reach ₹1,57,750 per 10 grams, as investors sought safe-haven assets amidst the equity turbulence. The Indian Rupee remained under pressure, trading at 90.70 against the US dollar.

Key Takeaways for Investors

• IT Sector Vigilance: The ₹5.7 lakh crore loss in IT highlights the risk of structural disruption. Historical trends suggest waiting for business model clarity before increasing exposure.
• FPI Dynamics: The ₹14,160 crore inflow is encouraging but heavily influenced by specific trade deal news. Monitoring sustainable buying is key.
• Inflation Realignment: The shift to a 2.75% January inflation print under the 2024 base series suggests the RBI has significant room to maintain current interest rates.
• Quality Over Hype: The 12.3% crash in Muthoot Finance despite a profit jump reminds investors to look past headline numbers to core operational strength.
• Dividend Shields: Companies like ONGC with a total ₹12.25 dividend for FY26 provide essential downside protection in volatile markets.

What This Means for Investors

The current market narrative is an intersection of technological anxiety and structural maturity. Data suggests that while the IT sector is in a painful transition, the broader economy is benefiting from modernized policy frameworks. Investors may consider monitoring domestic cyclicals—such as PSU Banks and Auto—which appear more resilient to global AI shocks.

Historically, market transitions of this scale involve significant churn. The upcoming India-AI Impact Summit and the Brazil trade agreements could provide the next set of catalysts for sector-specific rallies. However, given the rising VIX, a staggered investment approach focusing on quality and dividend yield is likely the most prudent path.