Market Pulse: Indian Equities Indian equity markets have entered a decisive recovery phase as of February 23, 2026. The benchmark **Nifty 50** has reclaimed the **25,700** level, while the **BSE Sensex** continues to trade firmly above **82,800**. This upward momentum follows a complex 18-month cycle, signaling a shift from a defensive stance to selective accumulation. Market breadth has notably improved, with over **2,200** advancing stocks against roughly **1,900** declining on the BSE. Volatility remains under control as the India VIX cools, reflecting growing investor confidence in the current price action. PSU Banking Dominance The Public Sector Undertaking (PSU) banking sector has emerged as the primary engine for the current rally. The **Nifty PSU Bank Index** recently touched **9,665**, driven by historic earnings growth. Combined net profits for state-owned lenders reached **₹52,603 crore** in the December quarter (Q3 FY26), an **18%** year-on-year increase. **State Bank of India (SBI)** reported a record net profit of **₹21,028 crore**, contributing roughly **40%** of the total sector earnings. Asset quality is at a multi-year high, with gross NPAs falling to a record low of **2.30%**. With credit growth holding at **12%**, these institutions serve as a robust proxy for the broader domestic economy. Corporate Earnings and Growth India Inc. continues to show resilience, with corporate earnings expected to grow at an accelerated pace of **8.8%** to **13%** for the fiscal year. This performance is backed by a stable GDP growth projection of **7.2%** for the quarter, maintaining India’s position as a top-performing major economy. Quality stocks are witnessing a "buy-on-dips" sentiment. While the IT sector has faced headwinds due to global spending caution—dropping roughly **1.2%** in recent sessions—sectors like Metals, FMCG, and Infrastructure have picked up the slack. **Larsen & Toubro** and **Tata Steel** have recently hit or approached 52-week highs, emphasizing the strength in capital goods and industrial segments. Institutional Resilience A structural shift in market dynamics is now evident. While Foreign Institutional Investors (FIIs) have been selective, withdrawing approximately **₹25,000 crore** in early 2026, Domestic Institutional Investors (DIIs) have more than compensated with inflows exceeding **₹40,000 crore**. Robust retail participation through SIPs, which now exceed **₹15,000 crore** monthly, provides a massive liquidity cushion. This domestic conviction reduces the market's historical dependence on foreign capital and stabilizes valuations during global geopolitical uncertainty. Strategic Outlook The technical structure remains constructive. Immediate support for the Nifty is established at the **25,000–25,300** zone, while a sustained break above **25,800** could pave the way for a move toward **26,300**. The risk-reward balance is increasingly favorable for long-term investors. High-quality counters with clean balance sheets and strong dividend yields are the preferred targets for current capital allocation. Focus remains on sectors benefiting from government infrastructure spending and stable domestic consumption.