Indian equity markets are witnessing a sustained rally in February 2026, driven by a landmark interim trade agreement between New Delhi and Washington. The Nifty 50 has recently crossed the **25,900** mark, while the Sensex continues to trade above the **84,000** level, reflecting a gain of over **0.50%** in recent sessions. The primary catalyst is a significant reduction in reciprocal tariffs, which have been slashed from **25%** to **18%**. This move is expected to boost India's real GDP growth to **6.9%** for the 2026 calendar year. Market sentiment is further bolstered by a projected narrowing of the current account deficit to **0.8%** of GDP. Expert Sudip Bandyopadhyay highlights that the BFSI sector remains a dominant leader, with the Bank Nifty opening near **60,800**. Private and PSU banks are attracting strong buying interest due to healthy asset quality and steady credit growth. The specialty chemicals and agrochemicals sectors are also seeing a reversal in fortunes. Capacity utilization is rising, and new government initiatives like "Chemical Arks" are expected to lower import dependence. This aligns with a broader shift where investors are prioritizing companies with clear paths to profitability over pure volume growth. Institutional activity shows a notable shift as foreign investors returned to the buying side, recording net inflows of over **₹2,254 crore** in a single recent session. Domestic institutional investors (DIIs) continue to provide a structural cushion, contributing over **₹1,174 crore** in daily net purchases. This liquidity is largely directed toward large-cap stocks, although mid-cap and small-cap indices have shown resilience, with the small-cap index recently jumping **2.65%**. Market breadth remains firm, with advances significantly outnumbering declines. While the outlook is positive, experts urge caution regarding global competitive pressures and potential shifts in US trade policy. The focus remains on quality stocks within asset-backed sectors that offer high earnings visibility and operational discipline.