Market Outlook: Sector Rotations and Structural Shifts The Indian equity market is navigating a complex landscape of technical recoveries and deep structural transitions. Investors are currently balancing short-term tactical opportunities with long-term disruptions across key industrial and service sectors. Information Technology: The AI Inflection The IT sector has faced a significant sell-off in early **2026**, with the Nifty IT index experiencing a monthly contraction exceeding **21%** in February. This downturn, the sharpest since **2008**, has been triggered by fears that generative AI is commoditizing legacy services and disrupting labor-intensive business models. Despite these structural concerns, the index is currently showing oversold signals with a Relative Strength Index (RSI) between **16.71** and **23.14**. This technical positioning often facilitates short-term trading bounces as valuations become attractive relative to global peers. However, the decoupling of revenue growth from hiring—with only **1.35 lakh** net job additions projected for **FY26**—suggests a permanent shift toward AI-driven efficiency. Solar and Renewable Energy: Value in Volatility Solar energy stocks have entered a consolidation phase after a period of sharp price corrections. Medium-term opportunities are emerging as the government increases its support, notably raising the allocation for the PM Surya Ghar Rooftop Solar scheme to **₹22,000 crore**. While some major players have seen three-year returns dip as low as **-25%**, the underlying sector remains robust. India’s installed solar capacity has surpassed **92 GW**, and the reduction of customs duties on key manufacturing inputs like sodium antimonate is expected to protect margins. Investors are shifting focus toward companies with strong execution capabilities and healthier P/E ratios in a capital-intensive environment. Metals: Strategic Buy-on-Dips The metal sector is benefiting from domestic industrial strength and global price stabilization. India's steel production rose by **9.9%** year-on-year in January **2026**, maintaining a strong growth trajectory. Bullish sentiment is supported by potential import restrictions and higher tariffs on Chinese metals. Market experts suggest a "buy-on-dip" strategy, particularly for base metals and steel, as the national crude steel capacity target remains a priority for **2030**. In precious metals, gold is showing a steady bias with targets nearing the **170,000** level per 10 grams on the MCX. Pharma and Defence: Growth vs. Valuation In the pharmaceutical space, the **GLP-1** obesity segment is a primary growth engine, projected to reach a global market value of **$2.9 billion** in **2026**. While the long-term outlook is structurally positive due to the recognition of obesity as a chronic disease, the segment faces competitive uncertainty as patents expire and oral alternatives enter the market. Defence remains a favored long-term play, though the sector is currently undergoing a "valuation reset." After a pre-budget rally where some stocks gained up to **68%**, the Nifty Defence index saw a sharp **9%** correction in February. While capital expenditure for **FY27** has been raised to **₹2.19 lakh crore**, the market is now prioritizing execution over speculative narratives. This pause in rerating is viewed as a healthy normalization for long-term holders.