The Sensex and Nifty indexes have gone up and down a lot because of changes in Indian domestic policy and uncertainties around the world. Recent developments that have cast doubt on the market’s strength have made things hard for investors.
The Sensex rose 283 points to 83,734 on February 18, 2026, after three days of advances. The Nifty finished the day at 25,819, which is 94 points higher. There were more ups and downs in the early trading on February 19. At 11:30 AM, the Sensex was at 83,854 and the Nifty was at 25,861. This showed that the market was still unstable.
On February 19, the India VIX, which shows how volatile the market is anticipated to be, rose 3.52% to 12.65. This shows that investors were paying closer attention when it fell to 12.22. This volatility was exacerbated by people cashing in on early gains, weekly futures expirations, and problems in particular areas, notably metals and IT. The midcaps and other markets did better, going up to 60,183.This shows that people are still buying things even when the restrictions aren’t apparent.
Budget shocks in 2026
The release of the Union Budget 2026 caused one of the biggest drops. The Sensex dropped 500 to 550 points from its day’s high, and the Nifty dropped below 25,750 on January 31. The main reason for this was Finance Minister Nirmala Sitharaman’s choice to raise the Securities Transaction Tax (STT) on derivatives. The rate for futures would go from 0.02% to 0.05%, but the rate for options premium and exercise would keep the same at 0.15%.
The policy’s purpose was to stop people from making bets in the expanding options and futures market. But a lot of individuals were apprehensive that international funds that focus on high-frequency trading and derivatives would have poorer returns after taxes. Aakash Shah from Choice Equity Broking and other experts said that this could deter Foreign Portfolio Investors (FPIs) from putting money into the market. They sold more over Rs 41,000 crore in just January, which means they were net sellers. During the special trading session on February 1, people sold stocks to make money, which made the sell-off worse.
Unbalanced flows in institutions
FPIs are continuing selling stocks because people throughout the world are feeling less risky, US government yields are going up, and currencies are making things harder. On January 29, FPIs sold a net of Rs 394 crore, but Domestic Institutional Investors (DIIs) bought Rs 2,639 crore. This means that the home market is doing well.
This pattern kept prices from falling too much, but it didn’t keep them from being unstable, especially when foreign ownership hit multi-year lows. DII is sure since there are a lot of retail SIP inflows, long-term growth is clear, and the rules are strong. FPI is still careful, nevertheless, because prices are greater than those of other companies in the world that are similar. This kind of difference can occasionally lead to big adjustments, especially during busy times like Nifty weekly expiries.
Position on Money Policy
The RBI’s Monetary Policy Committee chose to keep the repo rate at 5.25% on February 6 and not take a side. At initially, this put some pressure on the market, as the Sensex fell 388 points and the Nifty fell 150 points. Governor Sanjay Malhotra said that inflation had stabilized, the economy was getting better, and there were threats from outside the country that compelled them halt. This disappointed people who were looking for cuts.
Some areas, including banking, were harmed by rising interest rates, but the markets gradually settled down and stayed close to flat. This choice shows how the RBI is seeking to balance India’s growth with the world’s uncertainty.
RBI Policy Signals and What They Mean for the Market:
What the RBI Policy Signal means for the Sensex and Nifty and for liquidity
In the middle At easeGetting improved little by little or going up
Be careful of inflationChanges in the market in the short term and sector rotation could make things tighter.
Global Headwinds
When the US Federal Reserve cuts rates, as the last 25 basis point cut, it usually helps emerging countries by making the dollar weaker and bringing in more foreign portfolio investment (FPI). This is positive for Nifty and Sensex because it keeps the rupee stable and makes it cheaper to borrow money. But higher US yields and President Trump’s threats of tariffs have caused some gains to be lost, which has led to outflows.
Geopolitical threats, such wars in the Middle East and the US cutting off India’s Russian oil supplies, drive up the price of crude oil. This has a favorable effect on how much the benchmark changes (0.76 for Sensex and 0.74 for Nifty). China’s possible recovery could disrupt the flow of money. Since India depends on imports, oil prices going up and down puts pressure on trade balances and inflation.
Because copper prices fell, Nifty Metal fell 2%. Hindustan Copper fell more than 4%.
Earnings and pressures in different areas
People were worried about a global recession, which hurt IT equities. The prices of other goods declined, which caused metals to drop. The profits for the third quarter of FY26 seem good. BSE had sales of Rs 1,334 crore, which is 61% more than last year, and a net profit of Rs 602 crore, which is 174% more.
Eicher Motors and Bharti Airtel were the top two companies. Their sales and profits went up by 12% and 15.3%, respectively, in the last few quarters.
Important Things to Know About the Sector:
Strong performers: The recent gains have been driven by the financial and consumer goods sectors.
Laggards: IT and metals, based on what people throughout the world are saying.
What causes volatility: Rolling over during expiration sessions makes swings bigger.
