Sensex, Nifty fall 1% as IT rout caps volatile February for markets

Benchmark indices slid over 1% on Friday, ending a turbulent February marked by a sharp IT selloff, weak global cues and erratic FPI flows, resulting in a third straight monthly drop

Benchmark indices fell over 1 per cent on Friday, capping a volatile February, where a sharp sell-off in information technology (IT) stocks eclipsed improving earnings, easing trade tensions and a revival in foreign portfolio investor (FPI) flows.

 

The Nifty 50 declined 318 points, or 1.25 per cent, to close at 25,179, while the BSE Sensex dropped 961 points, or 1.2 per cent, to settle at 81,287. February remained choppy, with the benchmarks logging five sessions of over 1 per cent declines. 

Friday’s slide was led by banking heavyweights. ICICI Bank and Kotak Mahindra Bank fell nearly 2 per cent each, while HDFC Bank declined 1.3 per cent. Together, the three stocks accounted for more than a third of the benchmark losses. 

For the month, the Nifty shed 0.6 per cent and the Sensex fell 1.2 per cent, marking their third consecutive monthly decline.

 

The IT index was the biggest drag, plunging 19.5 per cent in February — its worst monthly performance since September 2008 during the global financial crisis, when it had declined 20.9 per cent. The slump this month was on the back of a scare that rapid advances in artificial intelligence (AI) automation tools by US firms could pressure margins and disrupt traditional outsourcing models.

 

After dropping to its lowest level since 3 August 2023 on Tuesday, the Nifty IT index has gained close to 2 per cent in the last three sessions. Yet, the sell-off has erased nearly Rs 5.7 trillion in market capitalisation from its 10 constituents. 

Foreign portfolio investors sold equities worth Rs 3,466 crore on Thursday and continued to pare holdings on Friday, selling shares worth Rs 7,536 crore.Domestic institutions injected Rs 12,293 crore, their biggest single day purchase in a year. 

 

Weak global cues further weighed on sentiment. Asian markets tracked overnight losses on Wall Street after chipmaker Nvidia fell despite strong quarterly results. Investor caution also deepened after US-Iran nuclear talks ended without a breakthrough. A flare-up in tensions between Pakistan and Afghanistan added to geopolitical unease.

 

Most sectors ended February in the green, with the Nifty Consumer Durables index climbing 9.3 per cent and the Nifty Public Sector Bank index advancing 8.9 per cent. The gains in the Nifty PSB index were underpinned by the State Bank of India, which rose 11.6 per cent — its best performance since March 2025 — on robust earnings.

 

Excluding IT, realty and FMCG, all other major sectoral indices posted monthly gains.

 

The broader Nifty Midcap 100 and Nifty Smallcap 100 indices rose 1.2 per cent and 0.3 per cent, respectively, for February. However, on Friday, both indices fell over 1 per cent each. Market breadth was negative, with 1,660 stocks advancing and 2,528 declining on the BSE.

 

“Although domestic growth trends and sectoral traction provide support, the direction of institutional flows and macro developments will shape near-term market movement. Ambiguity around US-Iran negotiations and broader geopolitical implications are likely to keep participation selective,” said Siddhartha Khemka, head of research (wealth management) at Motilal Oswal Financial Services. He advised a tilt towards domestically oriented sectors with stronger earnings visibility and lower exposure to AI-led disruption.

 

The India VIX rose nearly 3 per cent to 13.44, signalling elevated uncertainty. “Any further spike in volatility could intensify downside risks. The key psychological support is seen at 25,000, and the broader structure suggests continued weakness, with pullbacks likely to face selling pressure,” said Nilesh Jain, vice-president and head of technical and derivative research at Centrum Finverse.