Indian equity benchmarks closed modestly higher on Tuesday, recovering from early losses as strength in the information technology sector offset declines in heavyweight Reliance Industries. The Nifty 50 index gained 0.17% to settle at 25,725.40, while the Sensex added 0.21% to finish at 83,450.96.
Sector Moves and Key Drivers
The session was characterized by significant sector rotation. The Nifty IT index climbed 1%, rebounding from a steep 8.2% decline the previous week. This surge was primarily fueled by Infosys, which jumped 1.9% after the company announced a strategic partnership with U.S.-based artificial intelligence firm Anthropic.
In other notable moves, Adani Enterprises surged 2.7% following an announcement from the Adani Group outlining plans to invest $100 billion by 2035 to build a network of renewable energy-powered data centers equipped for AI workloads. Conversely, metal stocks faced selling pressure, with the sector index falling 1.1%. State-owned lenders provided additional support, rising 2.1%.
Earnings Momentum Shows Improvement
The market action unfolds against a backdrop of improving corporate profitability. According to recent brokerage analysis, companies on the Nifty 50 index posted a 7.5% year-on-year increase in profits for the quarter ended December 31. This marks a significant acceleration from the 1.9% growth recorded in the prior quarter. The expansion was even more pronounced for the broader BSE 500, which reported a 16% rise in earnings.
Analysts at J.P. Morgan described the trend as a "broad-based earnings recovery." A note from Motilal Oswal highlighted that a substantial portion of the incremental profit growth was concentrated in five major stocks: State Bank of India, Tata Steel, HDFC Bank, Tata Consultancy Services, and Bharti Airtel, which together accounted for 78% of the gains. The brokerage also identified potential India-U.S. and India-EU trade agreements as key future catalysts for the market.
Guidance for New Investors
For individuals beginning their investment journey in Indian equities, days like this underscore a fundamental market dynamic: headline index movements can appear calm while underlying sector and stock-level activity is highly volatile. The influence of a single large-cap stock or a dominant thematic trend, such as AI or banking, can significantly sway the benchmarks.
The foundational step for any investor is setting up the necessary accounts. Indian securities are held electronically, requiring a dematerialized (demat) account with a SEBI-registered depository participant. This is paired with a trading account, which acts as the conduit between the demat account and the investor's bank for executing buy and sell orders. The account opening process involves documentation, Know Your Client (KYC) verification—which can be completed online via video—and, for those wishing to trade derivatives, submission of income-proof documents.
Investment Vehicles and Associated Costs
Once accounts are active, investors must choose their approach. Options include direct stock purchases or pooled investment products like mutual funds and exchange-traded funds (ETFs). ETFs, which track indices or baskets of assets and trade on exchanges like stocks, are held in demat form.
Cost awareness is critical, especially for active traders. Beyond brokerage fees, investors must account for statutory charges including SEBI turnover fees, stamp duty, Goods and Services Tax (GST), and the Securities Transaction Tax (STT).
Navigating Risks and Market Shifts
Regulators consistently warn investors to be vigilant against fraud. SEBI has cautioned about scams proliferating on social media and messaging platforms and urges dealing only with registered intermediaries through official channels. A basic safeguard is to verify a broker's registration status on SEBI's website before transferring funds or acting on tips.
Even with sound mechanics, markets present inherent risks driven by rapid thematic shifts. The recent selloff in IT stocks, for instance, was driven by concerns that AI automation could disrupt the business models of Indian software services firms. As one fund manager noted, these AI-driven risks represent "existential concerns" for the sector, with the ultimate impact on business models still uncertain.
Looking ahead, investors will monitor the release of a new series of GDP data from India's statistics ministry, scheduled by February 27, 2026, for fresh signals on the country's growth trajectory and policy direction.
