The Indian stock market witnessed strong buying interest in the morning session on Wednesday, February 25, supported largely by short covering and positive global cues.
The Sensex climbed more than 700 points to hit an intraday high of 82,958, while the Nifty 50 reclaimed the 25,650 mark, gaining nearly 1%. Broader markets also participated in the rally, with mid- and small-cap indices rising over half a per cent each, reflecting broad-based domestic buying. The overall market capitalisation of BSE-listed companies increased to ₹469 lakh crore from nearly ₹466 lakh crore in the previous session, making investors richer by ₹3 lakh crore in a single session.
Despite the rally, volatility has remained elevated this year. India VIX has surged nearly 40% so far in 2026, indicating heightened nervousness among investors. The 9–12 range is considered the lower band of India VIX, while 12–15 is seen as the normal range where markets have enough triggers to move in either direction without extreme swings.
As per a report of The Mint, VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said, "There are two significant trends in the market - one negative, the other positive - which will have a bearing on how the market moves in the near-term. The negative factor is the continued weakness in IT stocks triggered by the Anthropic shock. The positive factor is the FIIs turning buyers in February after a long time."
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AI impact and global cues shape sector trends
Market participants remain focused on how artificial intelligence could impact the IT sector. Global tech stocks have seen sharp swings amid concerns that AI could significantly disrupt IT services. After falling 5% in the previous session, the Nifty IT index rebounded 3% in morning trade on Wednesday, tracking the recovery in US tech stocks. The bounce followed Anthropic’s announcement of partnerships with several SaaS firms, including Salesforce, signalling collaboration rather than disruption.
The Nasdaq rose more than 1% on Tuesday, while IBM’s stock, which had seen its steepest single-day fall since October 2000 on Monday, gained over 5% the next day. Vijayakumar noted, "Many leading IT names have crashed between 18%-26% in the last month alone. Sustained selling in IT stocks may be over, and there is a possibility of some rebound in the segment. News of Anthropic’s Claude chatbot building partnerships in software and services with IT firms indicates that there will be collaboration opportunities for Indian IT firms."
Meanwhile, uncertainty over US tariffs continues to influence market swings. Although a reduction in tariffs provided temporary comfort, Washington has begun collecting newly imposed 10% tariffs on all imports after the US Supreme Court ruled on Trump’s tariffs. However, the administration is reportedly working to raise duties to 15%, raising concerns that the tariff issue may persist.
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Geopolitics, FII inflows and sector rotation in focus
Geopolitical developments, especially easing tensions between the US and Iran, have also shaped sentiment. The two countries are set to hold the third round of nuclear talks in Geneva on February 27. In his State of the Union address, Trump said he prefers a diplomatic resolution but described Iran as “the world's no. 1 sponsor of terrorism”, according to Hindustan Times.
Another major support has been foreign capital flow. After seven straight months of selling, foreign institutional investors (FIIs) turned buyers in February. So far this month, FIIs have purchased Indian equities worth ₹1,370 crore in the cash segment.
"FIIs are turning buyers in February after a long time. If the weakness in IT stocks subsides and the segment recovers, the tailwind of FII buying can lift the markets. Importantly, FII buying has fundamental support from a strong economy and rising corporate earnings. Segments witnessing FII buying like financials, capital goods and pharmaceuticals are likely to remain resilient," said Vijayakumar.
Sector-specific buying has also supported the rebound. Mishra observed that metals, auto, banking, and energy are showing resilience despite broader market weakness, while IT, FMCG, and realty continue to face pressure.
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