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Informist, Friday, Feb. 20, 2026

 

MUMBAI – The benchmark equity indices are expected to move in a range with a negative bias next week as concerns of an escalation of the geopolitical tension between the US and Iran will continue to dampen investor sentiment. Volatility in stocks of traditional software-makers globally will also add to the unpredictability in the domestic equity markets, analysts said.  

 

US President Donald Trump has warned that Iran has 10–15 days to strike a deal with his negotiators "or bad things will happen". The rise in tensions has also driven the price of crude oil higher, which is a net negative for domestic companies, analysts said. "Whether there will be a deal after the standoff or whether missiles will fly will determine the market behaviour in the near term," V.K. Vijaykumar, chief investment strategist at Geojit Investments, said. "The sooner a deal is reached, the better it will be for Indian equity markets," Narendra Solanki, head of fundamental research, investment services, at Anand Rathi Share & Stock Brokers, said.

 

If the standoff escalates, resulting in the closure of the Strait of Hormuz by Iran, the price of Brent crude oil could shoot up to $100, Vijaykumar said. However, this is unlikely since the consequences of a closure of the strait would be devastating for Iran, the analyst added.

 

Information technology services are caught in "a narrative war" with stocks of these companies declining on fears of revenue loss from generative artificial intelligence competition, Kotak Securities said. The sharp stock move reflects deeper concerns about the long-term relevance and longevity of IT services, the brokerage said. However, it suggested that markets may be giving the disruption more weightage than current evidence supports. "Valuation comfort alone is unlikely to drive a re-rating (of IT companies)," the brokerage said. "For sentiment to turn, companies will need to demonstrate visible and sustained growth acceleration." Moderate improvement at Cognizant and a minor improvement in Capgemini have indicated growth acceleration in the year of the largest generative AI headwinds, it said. "Whether growth can accelerate in a year of high AI-led deflation will determine the next phase for the (IT) sector," it said.

 

Other analysts agreed that AI-related developments could hit the revenues of IT companies in the long term. "The Anthropic shock shaved 13% from the (Nifty) IT index in a fortnight," Vijaykumar said. "Experts feel that the new AI tools will make many jobs being done by Indian IT companies presently redundant. Even in the midst of this existential threat, there are collaborative opportunities as evidenced by the Infosys collaboration with Anthropic."

 

On AI-related opportunities, Solanki said the initial contracts for AI services are likely to be small implementations on a "pilot basis" for domestic players. "We are still two or three quarters away from seeing these smaller implementations coming in," the analyst said. Until then, legacy systems are likely to continue operations uninterrupted, he added.

 

"Domestically, a lot of things have fallen into place, (but) global volatility is a key risk to the market's performance," Solanki said. The markets have good expectations for the March quarter earnings of companies after decent December quarter results, he added. The below-expected earnings were largely because of the rise in costs caused by gratuities mandated by the government. The analyst said public-sector banks performed well in the trailing quarter, and he expects continued growth for these companies in the March quarter. 

 

Next week, the Nifty 50 is expected to consolidate in the range of 25500 to 26000 points. Significant call writing activity is seen in the region of 26000 points, Jatin Gedia, vice-president of technical research at Teji Mandi Investment Technologies, said. Friday, the Nifty 50 ended 0.5% higher at 25571.25 points. The BSE Sensex ended 0.4% higher at 82814.71 points.  End

 

Edited by Rajeev Pai

 

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