Breaking Down the Bear: Indian Markets Reel from AI Shockwaves Amidst Global Turmoil, February 25, 2026

Breaking Down the Bear: Indian Markets Reel from AI Shockwaves Amidst Global Turmoil, February 25, 2026

The Indian stock market witnessed a significant correction on Tuesday, February 24, 2026, as both the Sensex and Nifty 50 plunged over 1%, driven primarily by a sharp sell-off in the IT sector. This "IT Massacre" was fueled by escalating global fears regarding AI-led disruption and renewed trade war uncertainties. Investors are now closely watching Nvidia's crucial Q4 FY2026 earnings report tonight, February 25, 2026, and President Trump's State of the Union address for clearer market direction.

The Catalyst: AI Disruption and Tariff Threats

The primary trigger for yesterday's market downturn in India was a widespread panic across IT stocks. Reports suggesting that Artificial Intelligence could automate "human-centric" service roles faster than anticipated sent major players like TCS, Infosys, and Wipro into a tailspin. The BSE IT Index fell by 3.82% on Tuesday. This comes amidst ongoing discussions about AI's profound impact on the Indian IT sector, with some analyses indicating AI already handles over 40% of software development work in Indian tech firms, potentially displacing many junior and mid-level roles.

Adding to the global anxiety were resurfacing trade tensions. President Trump's recent move to impose a 15% global tariff under Section 122 of the 1974 Trade Act, following a US Supreme Court ruling, has injected significant uncertainty. While initially striking down some tariffs, Trump swiftly reimposed a blanket 15% levy, causing trading partners like India to reassess their strategies. This geopolitical development, alongside rising crude oil prices, compounded negative sentiment across Indian equities.

Financial Forensics: A Deep Dive into Market Movements

Yesterday, February 24, 2026, saw a brutal session for the Indian benchmarks. The BSE Sensex plummeted 1,069 points (1.28%) to close at 82,226. Similarly, the Nifty 50 dropped 288 points (1.12%), settling below the critical 25,450 mark at 25,425. Heavy selling pressure wiped out an estimated ₹2.85 lakh crore in investor wealth from the BSE. Top Sensex losers included Tech Mahindra (down 6.60%), HCL Technologies (down 6.10%), Infosys (down 3.91%), and TCS (down 3.79%).

In contrast, US markets managed a "Tuesday Turnaround" after a challenging Monday. The Dow rose +0.76%, the S&P 500 climbed +0.77%, and the Nasdaq gained +1.0%. This rebound was largely driven by a massive chip deal announcement between AMD and Meta Platforms. AMD's stock jumped after disclosing a multi-year, multi-generation partnership to supply Meta with up to 6 gigawatts of Instinct GPUs and EPYC CPUs for its AI infrastructure. This deal, potentially worth over $100 billion and including a performance-based warrant for Meta to acquire up to 160 million AMD shares, reassured some investors that AI spending remains robust.

Big Events After Market (Last Night to Today)

The market's direction for the week will likely hinge on several pivotal events:

• Nvidia "Judgment Day" Earnings: The world is holding its breath as Nvidia (NVDA) reports its Q4 FY2026 earnings tonight, February 25, 2026, after the US market close. Analysts expect Nvidia to post robust revenue of around $65.7 billion, a significant year-over-year increase driven by AI demand. The report is seen as a crucial barometer for the entire AI and semiconductor market.
• Trump’s State of the Union (SOTU): President Trump's address, also scheduled for today, is being closely watched for clarity on the 15% global tariff. Markets are looking for specific details, particularly whether there will be exemptions for "friendly" nations like India, which has already paused trade negotiations to review the implications.
• Crude Oil Pressure: Geopolitical tensions, particularly between the US and Iran, have kept Brent Crude prices elevated, hovering around $71.18 to $71.33 per barrel today. For India, a major oil importer, high crude prices present a significant headwind for inflation and the current account deficit.
• AMD + Meta Deal's Stabilizing Effect: The substantial AMD-Meta chip deal, valued at over $100 million, provided a temporary floor for tech stocks globally and helped the GIFT Nifty recover slightly from yesterday's lows, trading flat to slightly positive.

Market Impact: Cautious Optimism for a Bounce

The Indian market is expected to open with a cautious bounce today, February 25, 2026, following yesterday’s deep correction and positive cues from the US and GIFT Nifty. However, the prevailing sentiment appears to be "Sell on Rise," indicating that any upward movement might be met with profit-booking.

Foreign Institutional Investors (FIIs) were net sellers in the Indian equity markets yesterday, February 24, 2026, with some reports indicating selling pressure exceeding ₹3,400 crore. However, Domestic Institutional Investors (DIIs) acted as net buyers, infusing ₹3,161.22 crore into the market. Continued FII selling today could shorten any potential rally. Traders are also expected to reduce positions by the afternoon to mitigate overnight "Nvidia risk" ahead of its earnings announcement.

Today's Indian Stock Market Expectation: February 25, 2026

Factor	Outlook	Key Levels (Nifty 50)	Key Levels (Bank Nifty)
Sentiment	Nervous Recovery	Support at 25,350 is critical; if it breaks, we head to 25,000.
Nifty 50	Resistance: 25,600 – 25,750	Support: 25,320 – 25,350
Bank Nifty	Resistance: 61,500		Support: 60,800
Key Sector	IT & Banks	Look for a "relief bounce" in IT after yesterday's crash.

What to Watch Today:

• GIFT Nifty: Currently trading flat to slightly positive, suggesting a stable, albeit cautious, start for the Indian market.
• FII Selling: Continued heavy selling by Foreign Institutional Investors could quickly negate any recovery attempts.
• Pre-Earnings Jitters: Expect increased volatility and position squaring in the afternoon as traders prepare for Nvidia's earnings.

Key Takeaways for Investors

• Volatility Ahead: The market is expected to remain volatile, influenced by global cues and the Nvidia earnings.
• IT Sector Under Scrutiny: The "AI disruption" narrative will continue to impact IT stocks. Look for a potential relief bounce but be mindful of underlying structural concerns.
• Global Events are Key: Keep a close eye on Nvidia's results and Trump's SOTU for clarity on market direction and trade policies.
• Support Levels Crucial: For Nifty, 25,350 is a critical support level. A break below it could signal further downside.

FinScann Verdict

Today's market is a high-stakes balancing act between a potential technical bounce and lingering global uncertainties. While the AMD-Meta deal offered some respite to tech sentiment, the overwhelming shadow of Nvidia's earnings and Trump's tariff clarity will dictate the overall direction. FinScann advises investors to remain highly vigilant, focusing on quality stocks with strong fundamentals and managing risk effectively through careful position sizing.

Q: What caused the significant drop in Indian IT stocks yesterday? A: The major drop in Indian IT stocks on February 24, 2026, was primarily driven by concerns over the accelerating impact of Artificial Intelligence (AI) on "human-centric" service roles, alongside broader global trade war fears.

Q: How might Nvidia's earnings report impact the Indian market? A: Nvidia's Q4 FY2026 earnings report, due tonight, is highly anticipated and could significantly impact global tech sentiment. A strong report might provide a positive boost, while any disappointment could lead to further selling pressure, especially on Indian IT stocks.

Q: What is President Trump's 15% global tariff, and how does it affect India? A: President Trump announced a 15% global tariff on all goods entering the United States, utilizing a specific provision of the 1974 Trade Act. For India, this introduces significant trade policy uncertainty, with the nation already pausing trade negotiations to assess the implications.

Q: What are the key support and resistance levels for Nifty 50 today, February 25, 2026? A: For the Nifty 50, key support levels are identified around 25,320 – 25,350, with 25,350 being a critical psychological level. Resistance is expected in the 25,600 – 25,750 range.

Q: What was the FII activity like in the Indian market yesterday? A: Foreign Institutional Investors (FIIs) were net sellers in the Indian equity markets on February 24, 2026, with net selling observed. Domestic Institutional Investors (DIIs), however, were net buyers.

Disclaimer: For information only; not investment advice. Stock market investments carry risks. Please consult a SEBI-registered advisor before investing. FinScann assumes no liability for decisions made based on this report.