Indian Stock Market Deep Dive: February 6, 2026
Indian equity markets displayed notable resilience on Friday, February 6, 2026, as the benchmark indices managed to close in the green despite significant sectoral divergence. The BSE Sensex ended the session 266 points higher at 83,580.40 (+0.32%), while the Nifty 50 gained 51 points to settle at 25,693.70 (+0.20%).
The day's narrative was defined by a spectacular recovery in the Fast-Moving Consumer Goods (FMCG) sector, which staged a 2.27% rally, and the Reserve Bank of India's (RBI) decision to maintain the status quo on interest rates while introducing progressive structural reforms. However, the gains were capped by a third consecutive day of losses in the IT sector, which shed 1.5% amid intensifying fears of Artificial Intelligence (AI) led disruption.
1. FMCG Sector's Triumphant Comeback: Cigarette Stocks Ignite a 2.27% Rally
The Nifty FMCG index emerged as the top sectoral performer, surging 2.27%. This recovery is particularly significant as the sector had faced brutal selling pressure throughout 2025 (witnessing a Rs 35,000 crore exodus) and a further Rs 6,128 crore outflow from Foreign Institutional Investors (FIIs) in the first 15 days of January 2026.
Cigarette Stocks Lead the Charge
The rally was spearheaded by the tobacco segment, which rebounded after being oversold in January. ITC Limited, the Nifty 50's top gainer, climbed 5.21% to close at Rs 326.05. Godfrey Phillips India delivered a stellar 10.33% jump to Rs 2,186.75, while VST Industries also saw significant buying interest.
Key Catalysts for the Rally:
- Price Hike Implementation: Cigarette prices rose by Rs 22-55 per pack of 10. Analysts at ICICI Securities noted this covered a 22-28% increase in overall costs for 75-85mm sticks, successfully protecting manufacturer margins.
- Tax Stability: Nuvama Institutional Equities projected no further tax hikes for the next two years, following the new excise duty structure of Rs 2,050-8,500 per 1,000 sticks.
- Robust Q3 Earnings: ITC reported a 6.4% rise in net profit to Rs 5,087.87 crore, with revenue reaching Rs 21,706.64 crore. Godfrey Phillips saw profit jump 9% to Rs 343.29 crore on a 16% revenue surge.
- Institutional Interest: ITC witnessed block deals involving over 1.3 crore shares at an average price of Rs 321.80, a 4% premium to prevailing market prices.
| Company | Closing Price (₹) | Day's Change (%) |
|---|---|---|
| Godfrey Phillips | 2,186.75 | +10.33% |
| ITC Limited | 326.05 | +5.21% |
| Hindustan Unilever (HUL) | - | +2.83% |
2. RBI Policy: Status Quo with a Focus on Reform
The RBI Monetary Policy Committee (MPC) unanimously decided to keep the repo rate unchanged at 5.25%, maintaining a "neutral" stance. While the rate decision was expected, the central bank surprised the market with several progressive regulatory announcements.
Economic Outlook and Projections
RBI Governor Sanjay Malhotra highlighted India's domestic resilience while acknowledging global trade risks. The GDP growth forecasts were revised as follows:
- Q1 FY27 GDP Forecast: 6.9% (up 20 bps)
- Q2 FY27 GDP Forecast: 7.0% (up 20 bps)
- Current Year Growth Estimate: 7.3%
- CPI Inflation (Current Fiscal): Marginally raised to 2.1% (from 2.0%)
Progressive Reforms for Consumers and Markets
- Cyber Fraud Compensation: In a landmark move, the RBI proposed a Rs 25,000 compensation framework for victims of small-value digital frauds. Data shows 65% of digital frauds involve amounts below Rs 55,000.
- REIT Lending: Banks are now permitted to extend finance to Real Estate Investment Trusts (REITs), a move that boosted stocks like Mindspace Business Parks (+0.9%) and Nexus Select Trust (+0.5%).
- Corporate Bond Derivatives: The RBI will issue a framework for Total Return Swaps (TRS) on corporate bonds to improve liquidity and help investors manage credit risk efficiently.
- NBFC Rationalization: NBFCs with assets under Rs 1,000 crore and no public funds or customer interface are now exempt from registration requirements.
3. The Dawn of India's AI IPO Era: Fractal Analytics
February is set to witness a massive Rs 14,000 crore IPO pipeline, a sharp rebound from January's sluggish Rs 4,765 crore total. The highlight of this wave is Fractal Analytics, India’s first pure-play AI company to hit the public markets.
Fractal Analytics IPO Details
- Price Band: Rs 857-900 per share
- Issue Size: Rs 2,834 crore (Fresh issue of Rs 1,023 crore + OFS of Rs 1,810 crore)
- Valuation Target: Up to Rs 14,450 crore ($1.60 billion)
- Grey Market Premium (GMP): 21%, indicating high demand.
- Financials: H1 FY26 revenue grew 19.8% to Rs 1,559 crore.
Simultaneously, Aye Finance—an NBFC focused on micro-lending—will launch its Rs 1,010 crore IPO at a price band of Rs 122-129. Unlike Fractal, Aye Finance has a modest 4% GMP, reflecting the challenges currently facing the microfinance sector.
4. NSE IPO: The World's Largest Exchange Prepares to List
On February 6, the National Stock Exchange (NSE) board met to formally initiate its IPO process following a No-Objection Certificate (NOC) from SEBI. This is set to be one of India's largest-ever listings.
Proposed NSE IPO Parameters:
- Issue Size: Approximately Rs 23,000 crore
- Stake Sale: 4.5% via Offer-for-Sale (OFS)
- Implied Valuation: Over Rs 5 lakh crore
- Unlisted Price: Trading near Rs 2,000 per share
- Timeline: DRHP filing expected by late March or early April 2026
5. Corporate Earnings Spotlight: Hitachi Energy and LIC Shine
Hitachi Energy India
The stock surged 13.84% to Rs 21,850 following blockbuster Q3 results. Net profit skyrocketed 90.3% to Rs 261.4 crore, while revenue reached Rs 2,082.2 crore. The company’s order backlog stands at a massive Rs 29,872.2 crore, driven by demand from data centers and grid expansion.
Life Insurance Corporation (LIC)
LIC shares rose 7.7% after reporting a 17% jump in net profit to Rs 12,958 crore. The removal of the 18% tax on individual life insurance products in the Union Budget catalyzed a 46% surge in first-year premiums. Value of New Business (VNB) margins expanded to 18.8%.
Tube Investments
Despite a 17.6% rise in standalone profit, the stock crashed 8.52% to Rs 2,412.60. Investors expressed concern over the capital-intensive nature of its loss-making electric vehicle (EV) subsidiary.
6. Sectoral Performance and Market Breadth
The market breadth remained negative despite the headline indices closing higher. On the BSE, 2,200 stocks declined compared to 1,900 advances.
| Sector Index | Day's Change (%) | Key Movement Factors |
|---|---|---|
| Nifty FMCG | +2.27% | Cigarette price hikes & value buying |
| Nifty Consumer Durables | +0.96% | Festive demand optimism |
| Nifty Bank | +0.00% | Neutral RBI policy impact |
| Nifty Auto | -0.50% | Profit booking in heavyweight stocks |
| Nifty IT | -1.50% | AI disruption fears (Anthropic push) |
7. Commodities: The Silver Crash
MCX Silver futures experienced a brutal 6% crash, falling Rs 16,131 to Rs 2,52,719 per kg. This marked a 45% correction from recent peaks. Conversely, Gold staged a recovery, rebounding 3% to trade above $5,000 per ounce internationally as safe-haven demand returned.
8. The "Mother of All Deals": India-EU FTA Impact
The recently concluded India-EU Free Trade Agreement continues to act as a structural catalyst. The deal covers a $27 trillion market and 2 billion people.
- India's Commitment: Tariff cuts on 96.6% of EU exports.
- EU's Commitment: Tariff cuts on 99.5% of Indian goods.
- Auto Sector: Tariffs will drop from 110% to 10% over five years.
- Immediate Beneficiaries: Textiles, leather, and gems/jewelry gain zero-duty access to the EU market.
9. IT Sector Crisis: The AI Existential Threat
The Nifty IT index continued its downward spiral as Anthropic (the maker of Claude AI) pushed deeper into enterprise automation. TCS (-1.71%) and Tech Mahindra (-1.83%) were hit hard. Motilal Oswal warned that 9-12% of traditional IT service revenues could be wiped out within four years due to automated code generation and AI-led testing.
10. Key Takeaways for Investors
- FMCG Recovery: The sector is seeing a "great rotation" back to value. ITC and HUL are leading the charge as DIIs (who bought Rs 2,446.33 crore today) offset FII selling.
- The AI Premium: The market is rewarding pure AI plays (Fractal Analytics' 21% GMP) while penalizing legacy IT models.
- Infrastructure Growth: Hitachi Energy’s results prove that India's grid expansion and data center build-out are high-growth themes.
- Regulatory Stability: The RBI’s steady hand on interest rates and focus on digital safety (Rs 25k fraud cover) provides a stable backdrop for long-term equity investment.
- Currency Strength: The Indian Rupee is at a three-year weekly high, closing at 90.26 per USD, reflecting global confidence in India's macro story.
What This Means for Investors
Historical trends suggest that while FII selling can cause short-term pain, the strong domestic liquidity provided by DIIs and retail investors is creating a floor for the market. The upcoming Rs 23,000 crore NSE IPO and the launch of AI-native firms like Fractal Analytics suggest that the Indian market is evolving beyond traditional services. Investors may consider monitoring the upcoming February 9-11 IPO subscription window and the implementation of the India-EU trade deal as key indicators for the next market leg.