Market Snapshot

The Indian equity benchmarks closed in the red on Thursday, February 05, 2026, breaking a three-session winning streak. The BSE Sensex plummeted 503.76 points, or 0.60%, to settle at 83,313.93, while the NSE Nifty 50 declined 133.20 points, or 0.52%, to end at 25,642.80. The broader markets faced even steeper pressure, with the Nifty Smallcap 100 index dropping 1.29% and the Nifty Midcap 100 falling 0.28%. Total market capitalization of BSE-listed firms saw a significant erosion of over ₹2 lakh crore in a single session.

Sectorally, the selling was broad-based. Nifty Metal, Nifty IT, and Nifty Auto were among the top laggards, with the metal index shedding over 1%. In contrast, Nifty PSU Bank managed to buck the trend, closing 0.38% higher.

Institutional Flows: Cash Market

Institutional activity reflected a cautious stance as the market relinquished gains from the recent post-Budget and India-US trade deal rally. The latest provisional data available for the previous session (February 04, 2026) showed a modest but supportive trend which reversed during Thursday's trade:

• Foreign Institutional Investors (FIIs) were net buyers of ₹29.79 crore.
• Domestic Institutional Investors (DIIs) were net buyers of ₹249.54 crore.

Early estimates for the February 05 session suggest that FIIs turned net sellers, tracking the risk-off sentiment in global markets, while DIIs continued to provide some support at lower levels.

Derivatives Market Activity

Positioning in the derivatives segment indicated high-stakes indecision among traders ahead of the RBI policy outcome.

• The Nifty Put-Call Ratio (PCR) improved slightly to 1.07 from 1.02, hinting at some defensive put writing at lower strikes.
• India VIX, the market's volatility gauge, cooled by nearly 5% to settle at 12.25, suggesting that the day's decline was more a case of orderly profit booking rather than panic selling.
• FII Long Ratio in index futures saw a marginal jump to 18.7%, though the overall sentiment remained skewed toward hedging.

Key Drivers and Outlook

Several factors combined to pull the indices lower during Thursday's session:

• Global Tech Sell-off: Weakness in U.S. tech giants and a nearly 4% crash in South Korea’s Kospi triggered a ripple effect across Indian IT stocks, which faced pressure from fears of AI-led disruptions.
• RBI Policy Anticipation: Investors preferred to stay on the sidelines ahead of the Reserve Bank of India’s interest rate decision scheduled for Friday, February 06, 2026.
• Profit Booking: Following a sharp rally driven by optimism over the India-US trade agreement, investors opted to lock in gains in outperforming sectors like metals and realty.
• Geopolitical Tensions: Heightened U.S.-Iran negotiations and global macro uncertainty led to a general "risk-off" mood among foreign portfolio investors.

Outlook: The Nifty is currently consolidating near its 50-day Exponential Moving Average (DEMA) of 25,648. The immediate support zone is identified between 25,440 and 25,500, while resistance remains firm at the 25,800–25,850 level. The market's next decisive move will likely be dictated by the RBI’s commentary on inflation and interest rate trajectories.

TAGS: FII, DII, Stock Market, Institutional Investors, Nifty, Sensex

Tags: FII DII Stock Market Institutional Investors Nifty Sensex