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Informist, Wednesday, Feb. 25, 2026

 

By Gopika Balasubramanium

 

MUMBAI – The headline equity indices are likely to remain under selling pressure in the near term, with analysts saying buying momentum is only likely to return once the Nifty 50 holds above 25600 points. The derivatives options chain shows traders have added short positions at immediate out-of-the-money call contracts, indicating downside pressure at such levels. At a fundamental level, developments related to artificial intelligence and US tariffs will continue to be in focus, alongside US-Iran relations.

 

After the US Supreme Court struck down most tariffs imposed by him in 2025, President Donald Trump imposed a baseline 10% tariff on all US imports for 150 days. The new tariff came into effect Tuesday. Trump has threatened to raise the baseline tariff to 15%. Though he is yet to sign an executive order to raise the baseline tariff to 15%, analysts believe Trump is likely to raise import duties in the future notwithstanding the Supreme Court's order. 

 

"Looking ahead, geopolitical tensions such as US–Iran developments, along with AI (artificial intelligence) and tariff-related news flow, are likely to shape market direction in the near term," Vinod Nair, head of research at Geojit Investments, said in a note. Furthermore, some technical analysts expect the indices to move in a range in the coming sessions. Wednesday, the Nifty 50 rose 57.85 points or 0.2% to close at 25482.50 points.

 

"Going forward, we expect the market to remain sideways until there is an improvement in investor confidence," Rupak De, technical analyst at LKP Securities, said in a note. "Immediate support is placed at 25300; as long as this level is maintained, the possibility of a rally remains intact. On the higher end, resistance is placed at 25650–25750."

However, selling at higher levels in the Nifty 50 Wednesday likely prompted traders to add short positions at immediate out-of-the-money and at-the-money call options. Call contracts between 25500 and 26000 strike prices had open interest of around 8 million each, suggesting the index will continue to face selling pressure at higher levels.

 

"We are of the view that the 20-day SMA (simple moving average) or 25,600/82500 will act as an immediate resistance zone for day traders," Shrikant Chouhan, head of equity research at Kotak Securities, said in a note. "As long as the market trades below this level, the weak sentiment is likely to continue on the downside, with a potential slip toward the 200-day SMA or 25,350-25,300/82000-81800."

 

In the US, equities had risen late Tuesday, led by gains in Advanced Micro Devices and software stocks, as investors' fears of artificial intelligence disruption to industries eased. Shares of AMD jumped 8.8?ter Meta Platforms signed a multi-year deal with the company that would deploy up to 6 gigawatts of AMD's graphics processing units for AI data centres, according to multiple media reports. Meta will also invest in AMD through a performance-based warrant for up to 160 million shares of the chipmaker, reports said.

 

The tech rally in the US was mirrored in the gains of shares of domestic information technology companies. Analysts said that in the near term, such developments are likely to lend cues to IT stocks. The Nifty IT closed higher Wednesday after falling for five sessions, having declined 9% in that period.

 

While software-as-a-service platforms remain deeply embedded and highly sticky in enterprises, AI-native applications are starting to nibble away at specific workflows and functionalities, HCL Technologies Managing Director and Chief Executive Officer C. Vijayakumar told Kotak Securities in the brokerage's Chasing Growth conference. He argued that even partial substitution creates pricing pressure, as enterprises now have credible alternatives. However, he emphasised that wholesale replacement of core software services systems is unlikely in the near term due to enterprise complexity.  End

Edited by Rajeev Pai

 

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