Dalal Street is likely to see a positive start on Wednesday after a sharp fall in the previous session. Analysts expect a short-term rebound after heavy selling in IT stocks dragged the market lower on Tuesday due to fresh concerns around artificial intelligence.
Gift Nifty futures were trading at 25,671.5 at 8:00 am. This suggests that the benchmark Nifty 50 may open above Tuesday’s closing level of 25,424.65.
Gaurav Udani, Founder, Thincredblu Securities Pvt. Ltd., said, “Gift nifty is indicating a strong opening in Nifty, it is expected to open positive, up by 250 points at 25650. Nifty has strong resistance in 25850-26000 and strong support in 25350-25400 range. Currently nifty is trading sideways to bullish, traders can use buy on dips strategy.”
Other Asian markets rose 1.1%, tracking gains on Wall Street overnight. US markets recovered after San Francisco-based startup Anthropic announced 10 new ways for business customers to use its AI plugins. This renewed hope that AI could help improve profits in some sectors.
However, the same AI-related developments that lifted global markets have raised worries for Indian IT companies. Investors fear that AI-driven automation may affect project timelines and billing models for IT firms.
IT STOCKS UNDER PRESSURE
The IT index fell 4.7% on Tuesday and hit a 30-month low. This heavy fall pulled down the broader market. The Nifty dropped 1.1%, while the Sensex declined 1.3% during the session.
IT shares have fallen 21% in February so far, making it the weakest monthly performance for the sector in about 23 years.
The sharp correction in IT stocks has made investors cautious. Since IT has a high weight in the indices, further weakness in the sector could continue to impact the overall market.
TRADE AND TARIFF DEVELOPMENTS
There was some relief on the global trade front. India’s trade minister Piyush Goyal said that New Delhi will restart talks on a proposed trade deal with the US once there is more clarity. This comes days after US President Donald Trump’s tariffs were invalidated.
Trump has also warned trading partners against stepping back from recently negotiated trade deals with the US. These developments have kept investors alert, though some concerns have eased.
Oil prices are hovering near seven-month highs. Prices are firm due to fears of a possible military conflict between the US and Iran ahead of talks scheduled for Thursday. Higher oil prices can raise input costs for many sectors and may affect India’s import bill, which could weigh on market sentiment if tensions rise further.
WHERE SHOULD INVESTORS FOCUS?
Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd., said, “In the current global volatility, we recommend a gradual shift in focus towards domestic-facing sectors and themes less exposed to AI-related disruption. Sectors such as Banking, financials, insurance, FMCG, hospitals – remain relatively better positioned.”
“At the same time, we are positive on sectors that could benefit from AI & Data centre led capex, such as capital goods—particularly power, transmission and distribution, and industrial metals (copper, aluminium). Looking ahead, markets are expected to remain volatile within a broader range, driven by mixed global and domestic cues,” he added.
Market experts say that while a positive opening is likely, volatility may continue. The Nifty faces strong resistance between 25,850 and 26,000, while support is seen in the 25,350 to 25,400 range.
For now, traders may watch whether buying interest continues after the opening gains. If IT stocks remain weak, the upside may be limited. On the other hand, support from banking and other domestic sectors could help stabilise the indices.
