IT stocks face heavy selling on AI worries, while RBI keeps repo rate steady at 5.25%

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The Indian stock market remains under pressure today, as benchmark indices trade lower due to global weakness. The NSE Nifty 50 falls near 1% during morning trade, while the BSE Sensex is close to 0.9%. Selling has been noticed across large-cap stocks, especially in information technology and metal shares.  Market sentiment turns cautious after weakness in global technology stocks influences domestic investors.

The correction does not appear sudden but builds gradually over the week. Broader indices also showed dips, indicating that the weakness is not limited to just a few heavyweights. Mid-cap and small-cap stocks trade lower as well, reflecting a wider risk-off mood in the market.

Pressure on IT Stocks

Information technology companies lead the fall. Concerns grow that rapid adoption of artificial intelligence may reduce demand for traditional outsourcing services. Investors worry that automation could impact profit margins and slow future deal wins. Because of these fears, major IT exporters record sharp losses during the session.

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The IT index shows significant weakness for the week, registering one of its steepest short-term declines in recent months. Analysts note that valuation levels in the sector were already high, so any negative trigger brings strong selling. The fall in technology stocks drags the overall index lower, adversely affecting market confidence.

Institutional Flows and Market Volatility

Foreign portfolio investors remain cautious in February. Recent data suggests measured inflows earlier in the month, but daily trading shows selective selling in high-beta counters. Domestic institutional investors provide some support by buying quality stocks at lower levels, yet volatility remains high.

The constant push and pull between foreign and domestic investors creates choppy movement in indices. Gains in one hour often disappear in the next. This uncertain trend makes traders wary and halts aggressive positions.

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RBI Policy and Interest Rates

The Reserve Bank of India has maintained the repo rate at 5.25% in its February policy meeting. The central bank maintains a neutral stance, signalling stability in borrowing costs. This decision gives some comfort to financial markets because no surprise rate hike takes place.

Stable interest rates help companies manage loan expenses, but the benefit does not fully offset global concerns. Investors still focus more on earnings outlook and international developments. Even though policy remains steady, equity markets continue to struggle in the short term.

Rupee Movement and External Factors

The Indian rupee trades slightly weaker against the US dollar during the session. Risk-off sentiment across Asian markets impacts currency movement. Traders observe activity in offshore forward markets, while the central bank keeps watch on volatility.

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A weaker rupee can help exporters, but it also increases expenditure for import-heavy sectors. Mixed impact is seen across industries. Currency fluctuations add another layer of uncertainty to an already nervous market environment.

Overall Market Outlook

Today’s trading session shows a phase of consolidation rather than a major structural breakdown. Benchmark indices correct from recent highs, but macroeconomic indicators are fairly stable. Inflation trends and global technology sector performance continue to guide investor behaviour.

Short-term instability is expected to remain until clearer signals emerge from global markets, especially regarding US inflation data. Domestic fundamentals are present, but investor confidence has become more cautious. Markets may recover gradually once fear subsides, but near-term movement might be unpredictable.

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