India Markets: Nifty 50 Aims for 26,000 Amidst IT Recovery, Adani's AI Push, and Strong PSU Bank Momentum – February 18, 2026 Morning Update

India Markets: Nifty 50 Aims for 26,000 Amidst IT Recovery, Adani's AI Push, and Strong PSU Bank Momentum – February 18, 2026 Morning Update

Indian benchmark indices, the Nifty 50 and BSE Sensex, are demonstrating a firm positive bias this Wednesday morning (February 18, 2026, IST), extending recent gains driven by a resilient domestic narrative despite mixed global cues. The market is witnessing a notable attempt at recovery in the IT sector, bolstered by strategic AI partnerships, alongside the significant announcement of Adani Enterprises' ₹8.3 lakh crore ($100 billion) investment into AI-ready data centers. Concurrently, Public Sector Undertaking (PSU) banks continue their strong performance, offering crucial downside protection to the broader market. This dynamic environment suggests a consolidation phase with stock-specific opportunities emerging as domestic liquidity remains robust.

The Catalyst

Global markets presented a mixed picture overnight, with US equities experiencing continued tech volatility amidst AI disruption concerns, while European markets remained subdued and Asian markets showed mixed trends ahead of China's reopening next week. The dollar's strength exerted pressure on metals, though crude prices remained stable. Locally, however, several potent catalysts are driving investor sentiment. The IT sector is making a concerted effort at recovery following a recent sell-off, notably with Infosys gaining traction after news of a significant AI partnership. This aligns with broader expectations of a selective hiring recovery in the Indian IT sector in 2026, driven by demand for AI, data, and cloud skills.

A major headline grabbing investor attention is Adani Enterprises' ambitious plan to invest ₹8.3 lakh crore ($100 billion) by 2035 into building renewable energy-powered AI-ready data centers. This massive commitment is poised to position India as a global hub for AI infrastructure and is expected to catalyze an additional ₹12.5 lakh crore ($150 billion) investment across server manufacturing and related sectors, potentially fueling a ₹20.8 lakh crore ($250 billion) AI infrastructure ecosystem in India over the decade. This strategic move has propelled Adani Enterprises shares, signaling India's prominent role in the burgeoning AI landscape.

Furthermore, PSU banks and other financials are demonstrating sustained strength, with consistent buying interest fueled by credit growth optimism and improving earnings outlooks. The Nifty PSU Bank index has shown strong performance in 2026, with some stocks rallying significantly, reflecting investor confidence in the sector's improved fundamentals. This robust banking sector continues to provide a significant cushion against market downturns.

Financial Forensics

As of this morning, the Nifty 50 is trading around 25,700, while the Sensex hovers near 83,450. The Bank Nifty is exhibiting strong relative strength, positioned around 61,100. Notably, the India VIX, often referred to as the "fear gauge," is cooling at approximately 12.7, indicating a reduction in market volatility and improved investor confidence.

Sector-wise, the IT sector is attempting a rebound, with Infosys leading gains after its AI partnership announcement. Conversely, metals and autos remain under pressure, largely due to the strengthening US dollar impacting commodity prices.

Foreign Institutional Investors (FIIs) have shown a cautious stance, with some mild selling pressure observed, particularly in January 2026, which saw a net outflow of approximately ₹25,000 crore. However, Domestic Institutional Investors (DIIs) have consistently provided strong support, acting as net buyers with inflows of around ₹40,000 crore in January 2026, effectively cushioning the impact of FII outflows and stabilizing the market. This growing strength of domestic liquidity highlights a structural resilience in the Indian markets.

Market Impact

The current market dynamic suggests a range-bound consolidation in the short term, accompanied by intensified stock-specific action. The IT sector's recovery, particularly with a focus on AI, could provide tailwinds for specific tech giants and specialized service providers. Adani's massive AI infrastructure investment signals a long-term growth theme, likely attracting further capital into related sectors like data centers, renewable energy, and technology manufacturing. The consistent strength in PSU banks reinforces a positive outlook on India's financial stability and credit growth trajectory, which is crucial for overall economic health.

The broader market shows signs of improving breadth, yet nearly 50% of smallcap stocks are trading approximately 40% below their all-time highs, presenting selective long-term opportunities for astute investors. This correction in smallcaps, despite their historical outperformance over longer periods compared to the Nifty 50, could be an attractive accumulation window for fundamentally strong businesses at more sustainable valuations.

Key Takeaways

• IT Sector Resilience: Watch for the sustainability of the IT sector's rebound, especially companies leveraging AI partnerships and transformations.
• PSU Banking Strength: The PSU banking sector continues to offer stability and growth potential driven by credit growth optimism and improved asset quality.
• AI Infrastructure Boom: Adani's significant investment underscores India's rising prominence in the global AI infrastructure landscape, creating long-term thematic plays.
• Smallcap Opportunities: The correction in smallcap valuations may offer attractive entry points for selective, long-term investments in quality companies.
• Domestic Investor Support: Strong DII inflows are acting as a vital counterbalance to FII caution, providing essential market stability.
• Technical Levels: For Nifty, 25,600 and 25,500 are crucial support levels, while 25,800 and 26,000 act as resistance. A decisive break above 26,000 could trigger fresh momentum. Bank Nifty's positive trend sees resistance around 61,400+ and support at 60,700.

FinScann Verdict

FinScann analysis suggests that while global headwinds persist, India's domestic market exhibits underlying strength, propelled by strategic investments in future-forward sectors like AI and sustained growth in financials. Investors should maintain a tactical approach: buy quality stocks on dips and avoid chasing rallies, with a medium-term bullish undertone remaining intact.

Key Index Levels Summary (Feb 18, 2026, Morning IST)

Index	Current Level (Approx.)	Key Support (Immediate)	Key Resistance (Immediate)	Outlook (Near Term)
Nifty 50	25,700	25,600	25,800	Range-bound/Positive
Sensex	83,450	82,950-83,050	83,850-84,000	Range-bound/Positive
Bank Nifty	61,100	60,700	61,400+	Positive
India VIX	12.7	N/A	N/A	Cooling Volatility

Note: Data for market close on Feb 17, 2026, and morning indications for Feb 18, 2026. Levels are approximate and subject to real-time fluctuations.

Q: What is driving the recovery in the Indian IT sector? A: The Indian IT sector's recovery is largely driven by a renewed focus on AI-centric engagements, data analytics, cloud computing, and cybersecurity skills. Companies like Infosys are securing strategic AI partnerships, cushioning benchmark indices. Experts anticipate a selective, skills-based hiring recovery in 2026, shifting away from mass recruitment.

Q: How significant is Adani's investment in AI infrastructure for India? A: Adani Group's commitment of ₹8.3 lakh crore ($100 billion) into AI-ready data centers by 2035 is highly significant. It aims to establish India as a global leader in AI infrastructure, potentially catalyzing a ₹20.8 lakh crore ($250 billion) AI ecosystem over the next decade. This move underscores India's ambition to be a creator and exporter of intelligence in the AI age.

Q: Are PSU banks still a good investment given their recent run? A: PSU banks have shown robust performance in 2026, bolstered by positive earnings and sustained credit growth optimism. Their improved asset quality and government support make them resilient. While past performance is not indicative of future results, the sector continues to attract buying interest and provides crucial downside protection to the broader market.

Q: Is it the right time to invest in smallcap stocks? A: Nearly 50% of smallcap stocks are currently trading approximately 40% below their all-time highs, which some analysts see as a potential opportunity for long-term investors. Despite recent volatility, smallcaps have historically outperformed Nifty 50 over longer durations, suggesting that disciplined accumulation of fundamentally strong businesses at current valuations could be beneficial.