Quote on Weekly Note Feb 14 by Mr. Ajit Mishra – SVP, Research, Religare Broking Ltd
Below the Quote on Weekly Note Feb 14 by Mr. Ajit Mishra – SVP, Research, Religare Broking Ltd
Tech Sell-Off on AI Disruption Fears Drags Benchmarks Despite Supportive Macros
Market Summary
Markets ended the week lower, with benchmark indices declining around 1% amid rising concerns over artificial intelligence-led disruption and a sharp sell-off in technology stocks. The tone was initially positive; however, a steep decline in the final two sessions wiped out earlier gains and pushed the indices into negative territory. As a result, the benchmark indices — Nifty and Sensex — settled near their weekly lows at 25,471.10 and 82,626.76, respectively.
Key Market Drivers
Macroeconomic releases and the initial details of the India–US trade deal were largely supportive but failed to offset the drag from technology stocks, as fears of AI-driven disruption weighed on traditional business models and earnings visibility. Strong U.S. jobs data further reduced expectations of near-term Federal Reserve rate cuts, pressuring global risk assets and contributing to the domestic market’s weakness. On the flows front, sentiment remained somewhat supportive, with FIIs continuing as net buyers in equities.
Sectoral Snapshot
Sectoral performance was sharply divided, led by significant underperformance in technology-oriented segments. IT was the worst hit, falling more than 8%, followed by FMCG and the energy pack. In contrast, rate- and consumption-sensitive sectors outperformed. Auto stocks gained over 2% on the back of strong retail sales data, while pharma advanced more than 1%. Notably, resilience in banking and financial stocks — supported by rotational buying in select heavyweights — helped limit the overall decline in the benchmark indices.
Interestingly, broader indices held up relatively well despite market choppiness and ended flat to marginally higher, indicating selective risk appetite.
Key Events to Watch
The coming week includes important domestic macro releases that could influence near-term sentiment. Markets will monitor WPI inflation and Balance of Trade data for signals on price trends and external sector dynamics. High-frequency indicators due include HSBC flash PMI readings for Manufacturing, Services, and Composite, along with bank loan growth and foreign exchange reserves data. These releases will be evaluated for confirmation of growth momentum amid volatile global cues and continued repricing in technology stocks.
Technical Outlook
Nifty: The sharp correction in IT stocks has materially weakened overall market sentiment and is beginning to spill over into other sectors. A break below the 25,400 mark could open the way for a decline toward the 25,100 gap zone. On the upside, the 25,700–26,000 band is expected to act as a strong resistance area in the event of a rebound.
Bank Nifty: The index has shown relative resilience and closed near 60,186, ending nearly unchanged for the week. Immediate support is placed around 59,600, with a stronger base near 58,600. Resistance is seen near 60,900, and a decisive breakout above this level could trigger fresh upward momentum toward the 61,500–62,000 zone.
Broader Indices: Although selective buying is visible in smallcaps, midcaps appear relatively better positioned given the risk of further market declines in the near term. Participants should avoid averaging down on loss-making positions until there are clear signs of trend resumption in the benchmark indices.
Strategy Ahead
With ongoing repricing in technology stocks and concerns around AI disruption, a selective and risk-managed approach remains advisable. Investors should focus on quality large-cap names with earnings visibility and strong domestic demand drivers, such as autos and consumption-linked sectors, while remaining cautious on IT until price stability and earnings clarity improves. Traders should expect elevated volatility, maintain disciplined stop-losses, and avoid concentrated exposure. Trading positioning should remain balanced, with a tilt toward banking, auto, energy, and select metal stocks, while IT, FMCG, and realty may underperform in the near term.
Above views are of the author and not of the website kindly read disclaimer
