Markets are seeing the bright side with Sensex and Nifty recovering from early losses due to IT crisis

Indian stock benchmarks recovered from early losses to post gains late Friday as investors balanced optimism ahead of the release of the US-India trade deal against nervousness in the global technology basket. The NSE Nifty added 0.2% to end at 25,693.7, while the BSE Sensex rose 0.3% to 83,580.40. Both gauges ended the six-session trading week with gains of around 1.5% for the second week in a row.The Nifty IT index fell 1.5% on Friday, posting a 5% loss for the week, as the decline in US technology and AI stocks due to concerns over rising AI-related spending at Alphabet and rising competitive pressure spilled over to software services stocks in the rest of the world. Elsewhere in Asia, South Korea fell 1.4% and Hong Kong fell 1.2%. China fell 0.3%, Taiwan was flat, while Japan broke the trend with an increase of 0.8%. “IT stocks are struggling given the global slump in technology stocks due to increasing focus on AI, and investors should remain cautious on the sector,” said UR Bhat, co-founder and managing director of Alphaniti. Bhat added that Friday’s pullback was likely supported by foreign buying.

Foreign portfolio investors were net buyers at ₹1,951 crore on Friday, while domestic institutions sold ₹1,265 crore. So far in February, global investors have bought shares worth ₹9,716 crore after selling over ₹34,000 crore in January.

Investors had to navigate sharp swings in the market throughout the week, starting with the Union Budget during the special trading session on Sunday, the finalization of the Indo-US trade deal on Monday, the risk-off sentiment in the technology sector and the RBI’s monetary policy on Friday when the central bank kept the repo rate steady at 5.25% on the expected line. Analysts say the mood among investors now depends on the fine print of the bilateral trade deal.

“The market is awaiting the fine print of the US-India trade deal as it currently appears that there is a potential risk of a large influx of US imports,” said Bhat. “If on balance the deal benefits Indian exports, then there is room for significant gains.”

Derivatives indicators pointed to increasing uncertainty. A wider trading range indicated a lack of conviction among traders.

“Major indices opened strongly after the US-India trade deal and rose close to all-time highs, but have since fallen, indicating caution,” said Ajit Mishra, SVP Research at Religare Broking. He added that “the levels around 25,400 are a decisive factor for the market as any move down could lead to a decline and closing of the gap around 25100.”

In commodities, gold rose 2.3% and silver 4.7% to $74 on Friday morning, recovering from early day losses. Mishra noted that while gold remained relatively stable, silver could face further pressure. Geopolitics could also play a role in the direction of the market.