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India’s equity markets are bracing for a weak start on Friday, mirroring overnight losses on Wall Street and a cautious tone across Asian bourses. Technology stocks remain at the center of the storm as investors await crucial U.S. inflation data that could shape the trajectory of global interest rates.

With global cues turning fragile and domestic IT counters under heavy selling pressure, traders are preparing for another volatile session.

Gift Nifty Signals Lower Opening

Early indicators point to a subdued opening for benchmark indices. Gift Nifty futures were trading at 25,719.5 as of 7:38 a.m. IST, suggesting the Nifty 50 will begin the session below Thursday’s close of 25,807.2.

The anticipated drop follows a sharp decline in the previous session, where domestic equities retreated amid heavy selling in technology stocks. Broader investor sentiment has been dented by global uncertainty and fading optimism around an imminent U.S. rate cut.

IT Stocks Sink to Multi-Month Lows

The Nifty IT index has emerged as the weakest link in recent sessions. On Thursday, the sector gauge tumbled 5.5%, sliding to a 10-month low.

Concerns surrounding artificial intelligence-driven disruption in the outsourcing and software services space have unsettled investors. The sharp repricing reflects fears that automation and AI adoption could alter traditional revenue models for Indian IT firms.

So far in 2026, the IT index has declined 12.5%, nearly matching its full-year drop in 2025. The pace of the sell-off underscores the intensity of the sector’s current correction.

Ajit Mishra, Senior Vice President of Research at Religare Broking, noted that the steep decline has shifted short-term momentum.

He said the sharp correction has temporarily pushed bullish investors onto the defensive, as traders respond to sustained selling pressure in IT stocks amid global volatility.

The weakness may persist in Friday’s trade, especially after declines in U.S. technology shares overnight.

Wall Street Adds to the Pressure

Global cues remain unsupportive. The Nasdaq Composite, heavily weighted toward technology companies, fell more than 2% overnight as investors positioned themselves ahead of key U.S. inflation data.

Market participants are recalibrating expectations after stronger-than-anticipated U.S. jobs data for January reduced the likelihood of an early interest rate cut by the Federal Reserve.

The prospect of higher-for-longer rates has weighed on growth-oriented sectors, including technology, both in the U.S. and globally.

Adding to the nervousness, U.S.-listed shares of Infosys and Wipro fell sharply overnight, dropping approximately 10% and 5%, respectively. The steep declines in American Depositary Receipts (ADRs) often influence sentiment toward their domestic listings.

Asian markets opened about 0.5% lower, reflecting a broader risk-off mood across the region.

Inflation at Home: A Mixed Signal

On the domestic macroeconomic front, India’s retail inflation rose to 2.75% in January, according to newly revised data released on Thursday.

While the reading marked an acceleration compared to previous months, it remained within the Reserve Bank of India’s target band of 2% to 6%. Notably, this was the first time in five months that inflation returned squarely within the central bank’s comfort zone.

The data presents a nuanced picture: while inflation is not currently alarming, global headwinds and monetary policy uncertainty abroad could still influence domestic market direction.

For now, global developments appear to be overshadowing local macro stability.

Stocks in Focus: Earnings and Sectoral Moves

Beyond broader market sentiment, several heavyweight stocks are expected to remain in focus based on quarterly earnings announcements.

Hindalco Faces Profit Hit

Metals major Hindalco reported a 45% decline in quarterly profit. The fall was largely attributed to higher expenses related to fire-linked disruptions at its U.S. subsidiary, Novelis.

Operational challenges and elevated costs weighed on margins, putting pressure on the company’s bottom line.

Coal India Sees Softer Performance

State-run Coal India, which accounts for roughly three-quarters of the country’s coal output, also reported a drop in quarterly profit.

Production slowed during the period amid relatively subdued power demand, affecting overall financial performance.

ONGC Posts Improved Profit

In contrast, Oil and Natural Gas Corporation (ONGC) reported higher profit for the quarter ended December. However, revenue remained largely unchanged compared to the previous year.

The mixed earnings performance across sectors reflects the broader divergence in industry trends, with commodities, energy, and technology responding differently to global conditions.

What This Means for Investors

The combination of global volatility, IT sector correction, and evolving interest rate expectations is shaping near-term market direction.

For traders, the immediate trigger remains the upcoming U.S. inflation print. A higher-than-expected reading could reinforce the view that the Federal Reserve will delay rate cuts, potentially prolonging pressure on equities.

On the other hand, a softer inflation number may help stabilize sentiment, particularly in rate-sensitive sectors such as IT.

In India, the resilience of domestic inflation within the RBI’s target range offers some macro comfort. However, markets are currently taking cues from global developments, especially movements in U.S. bond yields and technology stocks.

Short-term volatility appears likely to persist until there is greater clarity on the global monetary policy outlook.

A Market at a Crossroads

Indian equities enter Friday’s session at a delicate juncture. Technology stocks are grappling with structural and cyclical headwinds, global markets are adjusting to shifting rate expectations, and investors are reassessing risk appetite.

While domestic inflation remains under control, external factors continue to exert outsized influence on sentiment.

The coming sessions may hinge on whether global data supports a more dovish narrative or reinforces caution. Until then, traders are likely to remain defensive, particularly in sectors already under strain.

(With inputs from Reuters.)

 

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