Market Outlook - February 2026

Market update

Equity Market Performance
The Indian equity market witnessed a broad-based downturn
in January, with the Nifty 50 declining 3.1% and the Sensex
falling 3.5%, driven by weak global sentiment, geopolitical
tensions, and currency volatility. Mid Cap and Small Cap
indices falling even sharper at 3.4% and 4.7% respectively.
Most sectors ended in red, led by steep drops in Realty (
10%), FMCG ( 8%), and Consumer Durables ( 8%). Meanwhile,
Global markets showed mixed trends—South Korea surged
(+24%), followed by Brazil (+13%) and Taiwan (+10%),
whereas Indonesia declined 3.7%. Indian markets ranked
among the weakest performers at –3.1%, alongside France,
which slipped 0.4%. FIIs sold US $3.9 bn of Indian equities in
the secondary market, whereas DIIs bought US$7.6 bn.
Source: Bloomberg, Kotak Institutional Equities (Data as on 31st January 2026 in local currency)

Macro Update

The Indian rupee depreciated 2.4% over the month,
closing at ₹91.9 per USD, pressured by risk‑off flows before
stabilizing towards month‑end. The US Federal Reserve
kept rates unchanged, maintaining its stance amid global
uncertainties. In commodities, gold and silver touched
record highs during the month before easing slightly, while
metals remained firm and crude oil stayed subdued. The
IMF upgraded India’s FY2026 growth forecast to 7.3%, citing
stronger domestic momentum.