Weak global cues and persistent risk aversion weighed on domestic stocks, dragging benchmark indices down on Friday and over the week.
The Nifty 50 ended 1.5% lower at 25,178.65, while BSE Sensex closed 1.8% down at 81,287.19 for the week. Both indices tumbled about 1.2% on Friday.
Market sentiment this week was largely shaped by the latest developments in artificial intelligence, which participants viewed as disruptive, according to Narender Singh, smallcase manager and founder at Growth Investing.
Additionally, the sharp sell-off in global technology stocks triggered by weaker-than-expected earnings in Nvidia and Block’s announcement of around 4,000 layoffs further tightened risk appetite, he said.
Singh noted that near-term sentiment has turned distinctly negative, leading to sustained pressure in IT and technology stocks. Both these sectors have lost nearly 14-18% in February, emerging as the worst performers this week. Realty led the laggards, falling nearly 4% since last week.
Meanwhile, safe-haven flows into precious metals and firmer crude prices amid renewed volatility in the US-Iran equation buoyed metal and oil & gas stocks, said experts. Both sectors emerged as the week’s top performers.
Global order
India was among the weaker performers globally this week. The Nifty 50 declined by more than 1%, even as several Asian markets advanced. South Korea’s KOSPI gained nearly 8%, while Japan’s Nikkei 225 and Vietnam’s Ho Chi Minh Index also ended in positive territory. The US benchmarks like the S&P 500 delivered largely flat returns.
“India’s underperformance is cyclical, though 2026 marks the third straight year of relative weakness,” said Anand K Rathi, co-founder of Mira Money. “Valuations have corrected from 23–25 times forward P/E to about 19–22 times, making them healthier.”
Yet, some respite appears to be on the horizon. Foreign portfolio investors (FPIs) staged a sharp comeback in February, pumping in a net ₹22,615 crore into Indian equities after pressing the sell button for three consecutive months.
Market experts view this recovery with skepticism. “While FPIs have remained marginally net positive in February, the recent bouts of selling suggest their flows remain highly tactical and sentiment-driven,” Singh said.
A durable structural shift in FPI inflows would require stronger and more consistent earnings delivery across the board, he said. While Singh thinks India might benefit from strong domestic growth visibility, improving earnings trajectory, and policy stability, he is concerned about pockets of overvaluation, particularly in small and mid-cap stocks (Smids).
Mixed fortunes
Turbulence defined Smids this week as a prominent mid-cap stock, IDFC First Bank Ltd, saw its market value erode by about 13% over the week following a severe internal crisis. The rout began on Monday, when the stock crashed 20% and hit its lower circuit after the bank disclosed a ₹590 crore fraud at its Chandigarh branch.
Singh warned that such events can amplify risk aversion towards Smids in the short term, given their broader underperformance of late. “But fundamentally strong names should continue to attract selective interest.”
While the bearish sentiment dominated markets, pockets of euphoria were also visible this week. For instance, Tejas Networks Ltd witnessed a dramatic turnaround, surging over 33% by the end of the week after a prolonged period of stagnation.
The company announced a global strategic agreement with Japan’s NEC Corp. to manufacture and supply 5G Massive MIMO radios. Investors viewed this as a critical milestone for the company’s technological capabilities, triggering an explosive growth in its stock price.
Selective optimism exists, but the sentiment remains firmly negative, Singh iterated. “The (market’s) view is likely to remain negative until the Nifty 50 delivers a sustained close above 25,700,” said Singh. “Until these levels are decisively reclaimed, any rallies are likely to face selling pressure.”