Indian Stock Market Deep Dive: February 9, 2026

PSU Banking Renaissance and Export Sectors Surge on Trade Deal Optimism

Monday, February 9, 2026, marked a historic session for the Indian equity markets. In a display of robust domestic strength combined with positive geopolitical developments, the Sensex surged 485 points to close at 84,065.75, while the Nifty 50 gained 173.60 points to settle at 25,867.30. This comprehensive analysis examines the convergence of multiple catalysts that have reshaped the market landscape, ranging from record-breaking public sector earnings to transformative trade agreements and strategic infrastructure breakthroughs.

For retail investors, the day's movement signifies more than just a green ticker; it represents a structural shift where value sectors like PSU Banking and Logistics are now performing alongside high-growth tech and export-oriented industries. The market breadth was exceptionally healthy, with the Nifty Midcap 100 rising 1.58% to 60,441.15 and the Nifty Smallcap 100 outperforming significantly with a 2.64% jump to 8,484.50.

PSU Banking Sector: State Bank of India Leads a Historic Rally

The public sector banking space witnessed an extraordinary surge on February 9, 2026, with the Nifty PSU Bank Index jumping 3.52%. This rally was primarily ignited by the exceptional third-quarter results of the State Bank of India (SBI).

SBI reported a record-breaking standalone net profit of ₹21,028 crore for Q3 FY26, representing a 24.5% year-on-year (YoY) increase that far exceeded analyst expectations. Following this announcement, the stock soared to an all-time high of ₹1,137, marking a 6.70% intraday gain.

Broad-Based Strength in Public Sector Banks

The momentum was not limited to SBI. The entire PSU Banking ecosystem participated in a synchronized rally, reflecting systemic improvements in asset quality and credit off-take:

SBI's Q3 results highlighted several fundamental strengths that have allowed it to outpace private sector heavyweights like ICICI Bank and HDFC Bank in key loan growth metrics. The bank has also raised its financial guidance for FY27, signaling high confidence in the sustainability of its current momentum. Institutional analysts at Bernstein have maintained a positive outlook on the sector, viewing this performance as a proxy for the overall health of the Indian economy.

Furthermore, the return of Foreign Institutional Investors (FIIs) has provided the necessary liquidity to sustain these levels. On February 6, 2026, FIIs recorded net purchases of ₹1,950.77 crore, bringing the month-to-date net buying to ₹2,645.53 crore.

India-US Trade Deal: A Watershed Moment for Exporters

The interim trade framework announced between India and the United States on February 7, 2026, has emerged as a transformative development for Indian trade dynamics. Under this new agreement, the US will reduce reciprocal tariffs on Indian goods from a staggering 50% down to 18%.

Crucially, the deal revokes the punitive 25% tariffs previously imposed on India due to its Russian oil procurement strategy. Commerce Minister Piyush Goyal revealed that the agreement extends zero-duty status to critical categories including:

• Jewellery
• Pharmaceuticals
• Smartphones

Impact on the Textile Sector

The textile sector was the most immediate beneficiary of this policy shift. Indian textile exports to the US totaled $8.3 billion in FY25, and the tariff reduction now positions Indian manufacturers as highly competitive compared to regional peers.

Comparative Tariff Landscape in the US:

• China: 30%
• Bangladesh: 20%
• Vietnam: 20%
• Pakistan: 19%
• India (New): 18%

Performance of Key Textile Stocks:

• Gokaldas Exports: Jumped 8.5% intraday to ₹847.95 (settled at +5.47%). The company has a 70% exposure to the US market.
• Welspun Living: Advanced 3.6% to ₹145.4 with its 65% US exposure.
• Arvind Ltd: Gained 5.2%.
• Filatex India: Surged 8%.
• Garware Technical Fibres: Rose 5%.

Capital Markets Evolution: Fractal Analytics and the AI Wave

On February 9, 2026, Fractal Analytics launched its highly anticipated ₹2,834 crore initial public offering (IPO), marking India’s first pure-play Artificial Intelligence listing. The offering is priced between ₹857-900 per share and consists of a fresh issue of ₹1,023 crore and an offer-for-sale (OFS) of ₹1,810 crore.

Fractal Analytics: Key Financial Metrics

• Revenue CAGR (FY23-25): 18%
• YoY Growth (1HFY26): 20%
• Attrition Rate: Improved to 15.7% from 16.3% in FY25.
• Valuation: Trading at 78.9x FY25 P/E at the upper price band.
• Grey Market Premium (GMP): ₹35.

Concurrently, Aye Finance—an NBFC backed by Alphabet’s CapitalG and Elevation Capital—opened its ₹1,010 crore IPO. Despite a 40% YoY profit decline in 1HFY26, the company maintains assets under management (AUM) of ₹6,027.6 crore and serves 5.86 lakh micro-MSME customers. The combined February 2026 IPO calendar is expected to raise over ₹24,000 crore.

Infrastructure Technology: Sterlite Technologies' 66% Surge

Sterlite Technologies (STL) has become a standout performer in the infrastructure technology space. The stock has zoomed 66% in just 10 trading days, moving from ₹86.35 on January 27 to an 18-month high of ₹143.6 on February 9, 2026.

This rally is fueled by the massive global demand for data centers and fiber connectivity. STL has secured ₹4,263 crore in orders year-to-date for FY26, marking a 40.3% growth over the previous year. To fund further expansion, the board recently approved the allotment of 45.3 million warrants to Twin Star Overseas at ₹110 per warrant, raising ₹498.3 crore.

The Data Center Opportunity

Global data center demand is projected to grow at a 76% CAGR from 2025, with total capex reaching $600 billion by 2027. This creates a massive tailwind for STL's fiber and connectivity solutions.

Regulatory Environment: SEBI Derivatives Reforms

On February 5, 2026, SEBI announced significant changes to the derivatives market to manage systemic risk. Effective May 5, 2026, the regulator will withdraw calendar spread margin benefits for single-stock derivatives on their expiry days.

Key Regulatory Changes:

• Traders must provide full margin coverage on the expiry day for expiring contracts.
• Calendar spread benefits will only remain for non-expiring contracts (next-month and far-month).
• Exchanges have a three-month window to update systems.

This move aims to prevent sudden margin shortfalls and excessive price volatility during settlement cycles.

Consumer Discretionary: Kalyan Jewellers' Growth Explosion

Kalyan Jewellers delivered exceptional Q3 FY26 results, with net profit nearly doubling to ₹416.2 crore—a 90.36% YoY increase. Revenue for the quarter surged 42% to ₹10,343 crore, driven by a 27% same-store sales growth.

Financial Highlights of Kalyan Jewellers:

• EBITDA: ₹750 crore (up 74.3%).
• EBITDA Margin: Expanded to 7.3% from 5.9%.
• Store Count: Net 47 outlets added in Q3, bringing the total to 483.
• Stock Reaction: Hit a 10% upper circuit at ₹435.90.

The company’s digital brand, Candere, and its Middle Eastern operations (contributing 11% to revenue) continue to show aggressive growth patterns.

Energy Transition: PFC-REC Merger and Green Corridors

The PFC-REC Power Giant

The boards of Power Finance Corporation (PFC) and REC Limited have granted in-principle approval for a merger. This consolidation will create one of Asia’s largest power financing entities with a combined loan book of approximately ₹17.33 trillion.

Adani Energy's Japanese Financing

Adani Energy Solutions Ltd (AESL) secured long-term financing from MUFG Bank and SMBC for a 6,000 MW high-voltage direct current (HVDC) transmission corridor. This 950-kilometer line will connect Bhadla, Rajasthan to Fatehpur, UP, facilitating the evacuation of renewable energy. The project is scheduled for commissioning by 2029.

Manufacturing and Innovation

Mitsubishi Electric's Chennai Plant

Mitsubishi Electric India inaugurated a ₹2,100 crore facility in Chennai. The plant has the capacity to produce 300,000 air conditioners and 650,000 compressors annually, targeting the growing demand for energy-efficient inverter systems.

Hindustan Zinc’s Battery Breakthrough

Hindustan Zinc (HZL), in collaboration with JNCASR, announced the development of zinc-ion battery prototypes for stationary storage. These batteries utilize non-flammable electrolytes, offering a safer and more cost-effective alternative to lithium-ion for grid-scale storage. The stock rose 2.6% to ₹625 on the news.

Logistics and Pharma Performance

• Shipping Corporation of India (SCI): Shares surged 18.9% to ₹264 as Q3 net profit jumped 140% to ₹426.93 crore.
• Zydus Lifesciences: Reported a profit of ₹10.42 billion (exceeding estimates of ₹9.32 billion), driven by 16.4% growth in the North American market.
• Biopharma Shakti: The ₹10,000 crore budget allocation for biologics has boosted confidence across Biocon (+3%), Piramal Pharma (+1.3%), and Sun Pharma (+2%).

Global Context and Market Outlook

The Indian rally was supported by a spectacular surge in Japanese equities, with the Nikkei 225 hitting a record high above 57,000. On the domestic front, the Indian Rupee appreciated 21 paise to ₹90.44 against the US Dollar.

In commodities, Gold surged 1.4% to $5,029.09 per ounce, while Brent Crude fell to $67.38 per barrel amid easing Middle East tensions.

Key Takeaways for Investors

• PSU Bank Turnaround: SBI's record ₹21,028 cr profit confirms the structural health of public sector banks; watch for sustained loan growth in FY27.
• Export Advantage: The reduction in US tariffs to 18% is a massive win for Gokaldas Exports and Welspun Living; the textile sector now holds a competitive edge over China (30% tariff).
• Infrastructure Momentum: Sterlite Tech's 66% run highlights the "pick-and-shovel" play for the data center boom; monitor ₹4,263 cr in YTD orders.
• Regulatory Watch: Traders must prepare for the May 5, 2026 deadline regarding single-stock derivative margins to avoid liquidity crunches.
• Value in Consolidation: The PFC-REC merger creates a ₹17.33 trillion behemoth; this scale is critical for India's clean energy financing targets.

What This Means for Investors

The current market environment suggests that India is moving into a phase of "Quality Growth." The outperformance of the Nifty Smallcap 100 (+2.64%) indicates that risk appetite is returning to the broader market, while the SBI results provide a safety net for large-cap valuations. However, investors may consider monitoring the 78.9x P/E valuation of new-age listings like Fractal Analytics, as high multiples require flawless execution.

Historical trends indicate that trade deals of this magnitude often lead to multi-year re-ratings for export-oriented sectors. While Nifty 50 valuations remain at a premium, the fundamental earnings growth seen in PSU Banks and Consumer Discretionary names like Kalyan Jewellers provides a strong floor for the index. Investors may consider a diversified approach, balancing structural winners in infrastructure with value plays in the financial sector.