Is AI saving the IT sector?

Market Update - Tuesday, 17 Feb

It was a very stable day in the markets. Most segments closed in the green, and there was a clear sense that the selling pressure we had been witnessing recently is beginning to ease. Infosys, along with several other IT companies, announced strategic AI partnerships, which provided some much-needed relief to the battered IT space. The broader narrative around artificial intelligence continues to gather momentum, especially with the AI Summit in Delhi drawing massive participation. Whether meaningful business is being concluded on the ground remains to be seen, but government commentary suggesting potential commitments of over $200 billion has certainly injected optimism into sentiment. At the very least, the tone has shifted from defensive to cautiously constructive.

Markets are not falling apart, nor are they staging a runaway rally. They appear to be consolidating within a range. Interestingly, the banking sector is showing relative strength and seems to be taking the lead. That, in my view, is a healthy development for the broader market. February and March are traditionally muted months due to financial year closure dynamics and the payment of advance taxes by corporates around mid-March. Historically, these last six weeks of the fiscal year are not particularly exciting. So, a period of sideways consolidation with selective leadership emerging should not surprise anyone.

• Nifty closed above its two-day high, a constructive short-term signal that I closely track. The index ended up 0.17%, with short-, mid-, and long-term trends all remaining positive. Overall, price behaviour continues to be orderly and supportive.

• Nifty Junior gained 0.54%, closing a prior gap. Momentum readings across timeframes remain positive, reinforcing improving participation beyond just the frontline index.

• Midcaps advanced 0.28% and continue to look structurally sound. Small caps rose 0.74%. While the long-term trend in small caps is still negative, historically they tend to catch up sharply once broader rallies sustain.

• Bank Nifty continues to lead decisively, closing at yet another all-time high (61,174). Short-, mid-, and long-term trends remain firmly positive — strong financial leadership remains a key pillar of current market stability.

Other Market Triggers

• Breadth: Strong at 326 advances vs 174 declines, indicating broad-based participation rather than a narrow rally.

• Heatmap: Widespread green, particularly in IT and auto stocks. However, pressure was visible in names like ITC, Tata Consumer, L&T, Adani Ports, Reliance, ICICI Bank, Kotak Bank, and Zomato.

• Nifty Next 50 pockets: PSU banks and select Adani stocks showed strength, while metals continued to remain weak and under selling pressure.

• Sectoral trends: PSU Banks +2.1%, Defense +1.3%, IT +1% led the gains. FMCG and Media posted modest advances. Metals -1.1% remained at the bottom and have been among the weakest performers recently. Over the past month, IT is down nearly 15%, highlighting the scale of prior correction.

• Commodities: Gold slipped around 1.2% but remains range-bound with a positive long-term trend. Silver corrected about 2%, though its broader structure remains constructive. For long-term investors, these zones may offer accumulation opportunities, though near-term volatility may persist.

U.S. Market Updates

• U.S. markets were closed on February 16, 2026, on account of Presidents’ Day.

What to watch next ?

• Continued leadership from Bank Nifty and sustained breadth might be key to maintaining stability.

• Monitor whether small caps transition from structural laggards to momentum participants — historically, that phase often accelerates broader rallies.

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Gold Is Disappearing: The Structural Supply Shock Markets Aren’t Pricing In

Tavi Costa recently shared compelling data on X about the global gold mining industry. The dataset tracks major gold discoveries worldwide — but only those with at least 2 million ounces of gold. Smaller discoveries are not included. This means we are looking only at meaningful, large-scale finds that can materially impact future supply.

From the 1990s through roughly 2006–2010, there was a steady stream of major gold discoveries. Multiple deposits exceeding two million ounces were being found regularly. Exploration activity was strong, and the industry had a healthy pipeline of future production.

At that time, future supply looked secure.

In 2011, gold prices touched nearly $2,000 per ounce. Typically, high prices encourage aggressive exploration. But surprisingly, after 2010–11, major discoveries declined sharply. In many years, only one or two significant discoveries were made. Even more striking — in 2023, 2024, and 2025, there have been zero major discoveries of 2+ million ounces.

Gold is simply not being found at scale anymore.