Indian Stock Market Deep Dive: February 15, 2026

Introduction

Indian equity markets are navigating a transformative period in mid-February 2026, characterized by three seismic shifts that are redefining the investment landscape. Despite a sharp correction on Friday, February 13, which saw the Sensex plunge over 1,000 points and the Nifty slide below the 25,500 mark, the structural foundations of India's capital markets remain exceptionally robust. This volatility, while concerning for some, is set against a backdrop of a "Retail Renaissance" and a significant "Regulatory Revolution."

For retail investors, the current environment offers a unique juxtaposition: the National Stock Exchange (NSE) has officially crossed the milestone of 250 million (25 crore) trading accounts, while Foreign Portfolio Investors (FPIs) have staged a dramatic comeback after three months of consistent selling. This article provides a comprehensive roadmap through recent policy changes, major corporate actions, and shifting market dynamics to help investors understand the forces at play in India's evolution into a global financial powerhouse.

I. Policy Earthquake: RBI's Dual Mandate Reshapes Capital Markets

A. The M&A Liberation: 75% Acquisition Financing Framework

On February 13, 2026, the Reserve Bank of India (RBI) unveiled landmark guidelines that fundamentally alter the landscape for mergers and acquisitions (M&A). Domestic banks are now permitted to finance up to 75% of acquisition values, effectively removing a long-standing competitive disadvantage against foreign lenders and private equity funds.

Key Regulatory Provisions:

• Enhanced Lending Limits: Banks can now deploy up to 20% of their eligible capital base for acquisition financing. This is a significant increase from the initially proposed 10% of tier-1 capital, signaling the RBI's confidence in the banking sector's resilience.
• Comprehensive Coverage: The framework covers both listed and unlisted companies. It permits financing through common equity shares, compulsorily convertible debentures (CCDs), or various hybrid structures.
• Top-Up Provisions: Banks can now finance existing shareholders looking to increase their stakes (from 26% to 90%), which facilitates strategic consolidations.
• Collateral Architecture: Loans must be secured by the acquired equity or debentures. Additionally, a mandatory corporate guarantee from the acquiring company or parent group is required as a safety layer.

This shift arrives as India's M&A market matures, with average deal sizes rising and cross-border transactions making up over 30% of activity. Large institutions like HDFC Bank, ICICI Bank, Axis Bank, and State Bank of India (SBI) are best positioned to capitalize on this new lending avenue.

B. The Broker Clampdown: Curbing Speculative Excess

In a balancing act, the RBI announced stringent prudential rules for capital market intermediaries on February 14, effective April 1, 2026. This move targets the speculative frenzy in the retail trading segment.

Core Restrictions:

1. Collateralization Mandate: All credit facilities to stock and commodity brokers must now be fully collateralized; unsecured exposure is no longer permitted.
2. Proprietary Trading Ban: Banks are explicitly forbidden from financing proprietary trading—where firms trade for their own profit using their own accounts.
3. Investment Financing Restriction: Lending for a broker's own investments is now prohibited to prevent excessive balance sheet leverage.

This cooling measure comes as the average daily equity derivatives turnover reached ₹19,459 crore in Q3 FY26, more than double the previous year's levels. While firms like Angel One and IIFL Securities may face margin pressure, the RBI's goal is to ensure productive capital deployment while mitigating financial stability risks.

II. The Great FPI Reversal: ₹19,675 Crore Influx

After a prolonged period of selling, Foreign Portfolio Investors (FPIs) have returned to the Indian markets. Following a cumulative exodus of ₹62,338 crore between November and January, FPIs injected ₹19,675 crore in the first fortnight of February 2026.

Breakdown of FPI Flows (Nov 2025 - Feb 2026)

Despite the overall positive trend for February, the market faced an "Anthropic shock" in the IT sector on February 13, leading to a single-day FPI sell-off of ₹7,395 crore. This volatility suggests a sectoral rotation rather than a complete exit from India. The turnaround is largely attributed to the US-India Trade Agreement, softer US inflation (rising 2.4%, below the 2.5% estimate), and a growth-oriented Union Budget 2026.

III. Retail Revolution: NSE's 25 Crore Accounts Milestone

The National Stock Exchange (NSE) achieved a historic landmark in February 2026, surpassing 25 crore (250 million) unique trading accounts. Remarkably, the last 1 crore accounts were added in just two months, and the last 5 crore (representing 20% of the total) were added in only 16 months.

Geographic and Demographic Insights

The top 5 states account for 49% of all trading accounts. Retail participation is further evidenced by the surge in Systematic Investment Plans (SIPs). Between April 2025 and January 2026, nearly 6 crore new SIP accounts were opened. Monthly SIP inflows have risen to ₹28,766 crore, a 21% increase from the ₹23,743 crore recorded in the previous period.

This systematic approach has paid off: the Nifty 50 delivered 11.3% annualized returns over the five years ending February 11, 2026, while the Nifty 500 generated 13.7%.

IV. Corporate Chronicles: Mergers, Bonuses, and Earnings Beats

A. PFC-REC Mega-Merger

The merger of Power Finance Corporation (PFC) and REC Limited aims to create a financing behemoth for India’s power sector. The combined entity will manage a loan book of ₹17.33 lakh crore, positioning it as the primary financier for India's transition to renewable energy (target: 500 GW by 2030).

B. BSE's Record Performance

The Bombay Stock Exchange (BSE) reported its strongest quarter ever in Q3 FY26, with an 11th consecutive quarter of revenue growth. Consolidated revenue hit ₹1,334 crore (up 62% YoY), while net profit nearly tripled to ₹602 crore (up 174%).

C. Eicher Motors' Capacity Expansion

Eicher Motors (owner of Royal Enfield) beat estimates with a Q3 net profit of ₹1,421 crore. Buoyed by September 2025 GST cuts (reducing duties on sub-350cc bikes from 28% to 18%), the company approved a ₹958 crore investment to increase production capacity from 1.46 million to 2 million units by FY28.

D. IRB Infrastructure’s Bonus Issue

Despite a 7.6% revenue decline to ₹1,871 crore, IRB Infrastructure announced a 1:1 bonus share issue and a 7% interim dividend. The company successfully unlocked ₹4,900 crore in equity through asset monetization, planning to redeploy this into new projects totaling ₹14,000 crore.

V. Forex Reserves and Macro Dynamics

India's foreign exchange reserves saw a decline of $6.711 billion, falling to $717.064 billion for the week ended February 6, 2026. This retreat from the all-time high of $723.774 billion was primarily driven by a significant correction in gold valuations.

Reserve Breakdown:

• Foreign Currency Assets (FCA): Increased $7.661 billion to $570.053 billion.
• Gold Reserves: Plunged $14.208 billion to $123.476 billion.
• Special Drawing Rights (SDRs): Declined $132 million to $18.821 billion.

The Rupee (INR) closed at 90.64 per USD on February 14. Analysts view 90.00 as a critical pivot point; a break below this could see the currency slide toward the 91.80-92.50 range.

VI. Retail Shareholding Reshuffle: Q3 Analysis

Data from Q3 FY26 highlights a shift in retail sentiment. While investors are exiting some mega-caps, they are flocking to PSUs and high-growth sectors.

• Coal India: Gained 4.43 lakh new retail shareholders (totaling 26.93 lakh), drawn by its high dividend yield of ₹5.5 per share.
• Ola Electric: In a surprising trend, retail holding surged to 29.74% despite the stock crashing 58% in 2025 and market share falling to 15.5%.
• Exits: Reliance Industries and Tata Steel saw the sharpest declines in retail holdings, suggesting a rotation into mid-caps or defensive dividend stocks.

VII. IPO Landscape: New Debuts and Upcoming Launches

On Monday, February 16, 2026, two major firms will debut on the exchanges:

1. Fractal Analytics: An AI-powered firm with a $310 million issue, oversubscribed 2.81x.
2. Aye Finance: An NBFC with a ₹1,040 crore issue, oversubscribed 1.04x.

Looking ahead, Gaudium IVF & Women Health will open its ₹200+ crore IPO on February 20. India remains the world's No. 2 market for primary equity issuance, raising nearly $22 billion in 2025.

VIII. Technical Outlook and Support Levels

Following the recent correction, technical indicators suggest the Nifty is at a critical juncture. The Nifty IT Index has been the hardest hit, plunging 8.2% in a single week and erasing ₹5.7 lakh crore in market value.

Critical Support and Resistance:

• Immediate Support: 25,400–25,300 (Cluster of 200-DMA and 200-EMA).
• Structural Support: 25,200–25,000.
• Resistance: 25,700–25,800 (A break above this is needed to target 26,000).

Key Takeaways

• FPI Sentiment Reverses: After selling ₹62,338 crore over three months, FPIs returned with ₹19,675 crore in early February.
• Retail Strength: NSE trading accounts hit 25 crore, with monthly SIP inflows reaching a record ₹28,766 crore.
• Regulatory Support: New RBI rules allow banks to finance 75% of M&A deals, while tightening broker norms to curb speculation.
• Corporate Moves: The PFC-REC merger creates a ₹17.33 lakh crore power sector giant.
• IT Sector Pain: The "Anthropic shock" wiped out ₹5.7 lakh crore in value, though ADRs show signs of a rebound.

What This Means for Investors

The current market reflects a "New Normal" where structural growth is frequently interrupted by cyclical turbulence. The RBI's decision to facilitate M&A while curbing retail speculation indicates a sophisticated attempt to mature the market. Investors should monitor the ₹25,300 level on the Nifty; holding this support is vital for maintaining the long-term bull case.

While the IT sector sell-off is painful, firms like Infosys and TCS are entering "deep value" territory for patient investors. Retail investors may consider maintaining SIP discipline to navigate the volatility while focusing on quality large-caps and dividend-yielding PSUs like Coal India and NTPC.