From AI Summit to RBI & FOMC minutes: Key factors that will guide stock markets this week

Indian equity markets witnessed sharp volatility last week, with benchmark indices slipping nearly 1% amid a sharp selloff in technology stocks triggered by rising concerns over artificial intelligence-led disruption. The late-week meltdown erased earlier gains and pushed equity benchmarks – Sensex and Nifty- close to their weekly lows, even as broader sentiment remained selectively constructive.

The Nifty 50 settled at 25,471.10, down 1.30% for the week, while the Sensex closed at 82,626.76, losing 1.25%. The market saw a sharp spike in volatility, with India VIX surging nearly 11% as investors rushed to cut exposure in IT counters.

IT meltdown leads the fall

The biggest drag came from the IT sector, which plunged over 8% during the week. Fears that rapid AI adoption could disrupt India’s traditional outsourcing business model dented earnings visibility and triggered aggressive profit booking.

According to VK Vijayakumar of Geojit Investments, the heavy selloff on February 13, when FIIs offloaded ₹7,395 crore , skewed overall February flows into the negative. Data till February 13 shows FIIs have been net sellers to the tune of ₹1,374 crore this month, despite buying on seven of eleven trading sessions.

Market participants believe foreign investors may have aggressively trimmed IT exposure as the sector reeled under what is being termed the “Anthropic shock,” referring to disruption concerns surrounding generative AI firms.

After turning buyers earlier in February following the India-U.S. trade agreement, FIIs reversed course in the final session of the week. However, domestic institutional investors (DIIs) provided strong support, purchasing ₹5,554 crore worth of equities, cushioning the downside.

Vijayakumar said that once the dust settles in IT, FIIs are likely to turn buyers again, especially given fair valuations in large caps and improving earnings prospects for FY27.

FOMC, RBI minutes in focus

Investors will closely track the minutes of the meeting of the Federal Open Market Committee (FOMC) for cues on the future trajectory of U.S. interest rates, while back home, the Reserve Bank of India (RBI) will release the minutes of its latest monetary policy meeting, offering insights into the central bank’s assessment of inflation, liquidity conditions and growth outlook.

The minutes of the January meeting of the Federal Reserve, due midweek, will be closely watched for clarity on the rate trajectory. U.S. GDP data for the October–December quarter will also be closely watched.

On the domestic front, the RBI will release the minutes of its latest monetary policy meeting, offering insights into inflation assessment and liquidity conditions.

AI summit in spotlight

Adding to the focus on technology and AI disruption will be the upcoming AI summit in India, expected to see participation from leading global AI figures including Sam Altman, Sundar Pichai, and Dario Amodei. The summit is also expected to be attended by heads of state and government from countries including France, Brazil, Spain, Sri Lanka, Finland, Greece and Switzerland.

The event comes at a time when AI-driven repricing is reshaping global tech valuations and influencing capital flows.

Key events to watch

The coming week includes important domestic macro releases that could influence near-term sentiment, said Ajit Mishra – SVP, Research, Religare Broking Ltd.

Markets will monitor WPI inflation and Balance of Trade data for signals on price trends and external sector dynamics. High-frequency indicators due include HSBC flash PMI readings for Manufacturing, Services, and Composite, along with bank loan growth and foreign exchange reserves data.

These releases will be evaluated for confirmation of growth momentum amid volatile global cues and continued repricing in technology stocks, he added.

Strategy for the upcoming week

With ongoing repricing in technology stocks and concerns around AI disruption, a selective and risk-managed approach remains advisable, said Mishra of Religare Broking.

“Investors should focus on quality large-cap names with earnings visibility and strong domestic demand drivers, such as autos and consumption-linked sectors, while remaining cautious on IT until price stability and earnings clarity improves.”

Trading positioning should remain balanced, with a tilt toward banking, auto, energy, and select metal stocks, while IT, FMCG, and realty may underperform in the near term.

The near-term range for Nifty is seen between 25,200 and 25,700, with bias toward selective dip buying at strong support levels, contingent on global cues and FPI flow stability, he added.