Sensex and Nifty Performance Overview

After opening sharply lower by 772.19 points, the Sensex struggled to regain momentum and ended the day down 0.97%. The index remains 3.97% below its 52-week high of 86,159.02, signalling a short-term correction phase. Notably, the Sensex is trading below its 50-day moving average (DMA), which itself is positioned above the 200-DMA, indicating a mixed technical setup with potential for volatility in the near term.

The Nifty mirrored this weakness, with all 38 sectors on the NSE declining, underscoring the pervasive risk-off mood. The Nifty Metal sector was the worst performer, shedding 3.13%, dragged down by commodity price pressures and subdued demand outlook.

Sectoral and Market Capitalisation Trends

The broader market segments also reflected the downtrend. The BSE100 large caps fell by 1.03%, mid caps declined by 2.95%, and small caps bore the brunt with a steep 5.07% fall. This disproportionate weakness in mid and small caps suggests profit booking and risk aversion among investors, possibly ahead of upcoming quarterly earnings.

Among sectors, the metal space led losses, while other key sectors such as financials, IT, and consumer discretionary also faced selling pressure. No sector managed to close in positive territory, highlighting the widespread nature of the decline.

Top Gainers and Losers Across Market Caps

Despite the broad sell-off, a handful of stocks bucked the trend. Engineers India emerged as the top gainer on the BSE500, surging 14.38%, supported by renewed contract wins and positive order inflows. Aditya Birla Fashion & Retail and Hexaware Technologies also posted gains of 6.03% and 5.38% respectively, reflecting sector-specific optimism in retail and IT services.

Conversely, Muthoot Finance was the biggest loser, plunging 11.52% amid concerns over asset quality and rising borrowing costs. Birlasoft and Praj Industries also suffered steep declines of 7.31% and 6.21% respectively, weighed down by disappointing earnings outlooks and sector headwinds.

Breaking down by market capitalisation, Hindustan Aeronautics was the top large cap gainer with a 2.27% rise, while Adani Power declined 6.07%. Hexaware Tech led mid caps higher with a 5.38% gain, whereas Muthoot Finance was the largest mid cap loser. In the small cap space, GE Power rallied an impressive 18.09%, contrasting with Genesys International’s 10.32% drop.

Market Breadth and Investor Activity

The advance-decline ratio across the BSE500 was heavily skewed, with only 63 advances against 435 declines, resulting in a ratio of 0.14x. This lopsided breadth indicates strong selling pressure and limited buying interest.

Foreign institutional investors (FIIs) and domestic institutional investors (DIIs) remained cautious, with net outflows reported in recent sessions, reflecting global uncertainties and domestic macroeconomic concerns. The cautious stance is likely to persist until clearer cues emerge from corporate earnings and global markets.

Global Cues and Their Impact

Global markets remained subdued amid lingering concerns over inflationary pressures and geopolitical tensions. Asian indices closed mostly lower, while European markets traded cautiously ahead of key economic data releases. The US Federal Reserve’s recent hawkish stance continues to weigh on risk appetite globally, impacting emerging markets including India.

Commodity prices, particularly metals and energy, have softened, pressuring related sectors domestically. The subdued global environment has contributed to the cautious tone among Indian investors, who are awaiting clearer signals from corporate earnings and macroeconomic indicators.

Upcoming Corporate Earnings to Watch

Investor focus is gradually shifting towards the upcoming earnings season, with ABB scheduled to report on 19 Feb 2026 and Schaeffler India on 24 Feb 2026. These results will be closely analysed for indications on demand trends, margin pressures, and capital expenditure plans amid the current economic backdrop.

Technical Outlook and Investor Takeaways

From a technical perspective, the Sensex’s failure to hold above the 50-DMA and the weak market breadth suggest a cautious near-term outlook. The 50-DMA remaining above the 200-DMA provides some medium-term support, but investors should watch for confirmation of trend direction in the coming sessions.

Sectoral weakness, especially in metals and financials, alongside mid and small cap underperformance, indicates selective stock picking will be crucial. Investors may consider focusing on fundamentally strong companies with resilient earnings growth and healthy balance sheets to navigate the current volatility.

Overall, the market correction presents both challenges and opportunities. While broad-based selling pressure is evident, pockets of strength in select stocks and sectors offer potential entry points for long-term investors.

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