Indian Stock Market Deep Dive: February 13, 2026

Introduction

February 13, 2026, will be etched into the memory of Indian equity market participants as a day of extreme structural divergence. In a single trading session, the promise of Artificial Intelligence (AI) transformed from a productivity catalyst into an existential threat for India's "crown jewel"—the Information Technology (IT) sector. While the Nifty IT Index suffered one of its worst weekly collapses in recent history, wiping out ₹3.11 lakh crore in market capitalization, the strategic landscape for Indian Defence PSUs was permanently altered by a historic ₹3.6 lakh crore procurement approval.

The broader indices felt the weight of the technology sell-off and a global commodities rout. The BSE Sensex crashed 1,048.16 points (1.25%) to close at 82,626.76, while the Nifty 50 plummeted 336.10 points (1.30%) to settle at 25,471.10. Total investor wealth erosion exceeded ₹4 lakh crore as contagion spread into the real estate and metal sectors. For retail investors, this session highlights a critical economic transition: India is simultaneously mourning the potential obsolescence of the traditional IT service model while aggressively modernizing its strategic military capabilities.

The AI Apocalypse: Understanding the ₹3 Lakh Crore IT Bloodbath

The Magnitude of Destruction

The Indian IT sector experienced what analysts have dubbed the "SaaSpocalypse"—a scenario where Software-as-a-Service (SaaS) and AI automation threaten to replace the manual labor-arbitrage model. The Nifty IT Index crashed 5.2% intraday to reach 31,422, a 10-month low. This brought the three-day decline to a staggering 12%, with month-to-date losses totaling 15.40%, erasing nearly ₹5.7 lakh crore from its peak value.

Tata Consultancy Services (TCS) notably slipped from being India's fourth-most valuable company to the fifth position this week. Other mid-cap and large-cap firms like Coforge (-6.00%), LTIMindtree (-3.64%), and Persistent Systems (-3.34%) also faced severe selling pressure.

The Anthropic Catalyst

The primary trigger was the launch of Anthropic's Claude Cowork platform. This AI tool demonstrated the ability to autonomously handle complex software development, testing, and maintenance—tasks that currently generate 40-70% of revenue for Indian IT firms. Jefferies analyst Jeffrey Favuzza noted that sentiment shifted instantly from "AI helps" to "AI replaces." This structural fear has led Foreign Institutional Investors (FIIs) to offload a record $8.5 billion in Indian IT stocks during 2025.

Structural Threat vs. Cyclical Opportunity

• The Bear Case (Motilal Oswal/Jefferies): Estimates suggest 9-12% of industry revenue could vanish over four years as AI reduces headcount requirements and project timelines. Revenue per project could drop 75% if a task that once required 10 engineers for a year is now done by three engineers in six months.
• The Bull Case (JPMorgan): Labeled the "Plumbers of the Tech World," JPMorgan argues that Indian firms perform essential infrastructure work that AI cannot easily replicate. They suggest current valuations imply a scenario worse than any historical downturn, which may be fundamentally unjustified.

Collateral Damage: Real Estate and Metals Caught in the Crossfire

The Bengaluru Connection

Real estate stocks with heavy exposure to IT hubs like Bengaluru and Hyderabad tumbled on fears of reduced residential demand. The Nifty Realty Index declined over 2%.

1. Prestige Estates Projects: Fell 3-4%.
2. Brigade Enterprises: Experienced a similar decline due to reliance on IT professional buyers.
3. Demand Concerns: IT professionals make up 40-50% of buyers in the ₹50 lakh to ₹2 crore residential segment. If hiring slows, housing demand in tech cities is expected to follow.

Metals and Mining: The Silver Crash

Global silver prices crashed 10%, the worst single-day performance in years, following strong US jobs data that strengthened the US Dollar.

Indian Silver ETF Performance:

• Tata Silver ETF: -7.0%
• HDFC Silver ETF: -6.6%
• Nippon India Silver ETF: -6.5%
• ICICI Pru Silver ETF: -6.2%

Hindalco Industries faced a "perfect storm," reporting a 45% YoY crash in consolidated net profit to ₹2,049 crore. The decline was primarily due to a ₹2,610 crore exceptional expense related to a fire at the Novelis Oswego facility in the US, which is expected to impact 2026 cash flow by $1.3-1.6 billion.

Policy Inflection: India's Statistical Revolution

India has introduced a revised Consumer Price Index (CPI) with 2024 as the new base year, replacing 2012. The first reading under this series reported January 2026 inflation at 2.75%.

Key Structural Changes:

• Food Weightage: Reduced from 46% to 37%, reflecting rising household incomes.
• New Categories: The basket grew from 6 to 13 major categories, now including e-commerce, streaming services (Netflix/Amazon Prime), and airfares.
• Inflation Data: While tomatoes surged 64.8%, core inflation remained stable at around 3%.

The Reserve Bank of India (RBI) held the repo rate at 5.25% in its February meeting, raising the FY26 GDP growth forecast to 7.4%.

Defence Sector: The Historic ₹3.6 Lakh Crore Approval

The Defence Acquisition Council (DAC) approved capital proposals worth ₹3.6 lakh crore ($40 billion), the largest in Indian history. The deal is strategically timed ahead of French President Emmanuel Macron's visit.

Breakdown of the Mega Deal:

• Rafale Fighter Jets: ₹3.25 lakh crore for 114 multi-role fighters to address the Indian Air Force's squadron gap.
• Maritime Reconnaissance: Additional Boeing P-8I Poseidon aircraft for the Navy.
• Anti-Tank Systems: Modern missiles for the Army to replace aging inventories.
• Coast Guard: 8 Dornier 228 aircraft for coastal security.

Stocks like Hindustan Aeronautics Limited (HAL) and Bharat Electronics Limited (BEL) are expected to be primary beneficiaries through domestic manufacturing and maintenance contracts under "Make in India."

Corporate Earnings Highlights

ONGC declared a second interim dividend of ₹6.25 per share, bringing the total FY26 dividend to ₹12.25. Conversely, Alkem Laboratories saw shares fall over 5% despite a high dividend, as investors weighed the risks of its €99.4 million acquisition of Swiss medical device firm Occlutech Holding AG.

Market Sentiment and Technicals

• India VIX: The fear gauge surged 13%, indicating extreme market anxiety.
• Support Levels: The Nifty failed to hold its 50-day Simple Moving Average of 25,750, signaling a bearish breakdown. Analysts suggest the next support lies in the 25,000-25,200 zone.
• Institutional Activity: FIIs were marginal net buyers of ₹108 crore on Feb 12, while DIIs supported the market with ₹276 crore in purchases.
• IPO Watch: Fractal Analytics and Aye Finance are set to list on Monday, Feb 16. Fractal is currently trading at a 1.22% discount in the gray market, reflecting the broader IT malaise.

Key Takeaways for Investors

• IT Wealth Erosion: The Nifty IT index has lost 15.40% this month. Panic is driven by structural fears of AI replacing traditional coding and testing roles.
• Defence Visibility: The ₹3.6 lakh crore approval provides long-term revenue visibility (7-10 years) for DPSUs like HAL and BEL.
• Inflation Accuracy: The new 2024 CPI base year better reflects modern digital spending but shows higher headline inflation (2.75%) than the old series.
• Commodity Volatility: Silver's 10% crash and the US Dollar's strength suggest a cautious outlook for metals and mining stocks in the near term.

What This Means for Investors

Data suggests we are entering a period of high "sectoral rotation." Conservative investors may consider moving towards "Dividend Aristocrats" like ONGC (yielding 5-7%) or Coal India to provide a buffer against volatility. While the IT sell-off looks like a "falling knife," long-term investors should monitor the JPMorgan thesis; if AI becomes an enabler rather than a replacement, current valuations for TCS and Infosys may represent a generational entry point.

In the defence sector, while the headline numbers are massive, actual capital outflows will be gradual. Investors should watch for execution efficiency and avoid chasing stocks at all-time highs. Monitoring the India VIX will be crucial in the coming week; as long as it remains elevated, cash-heavy positions might be prudent to capitalize on further market dislocations.