Market Brief: Defence, IT, and Banking Outlook Recent market activity highlights a significant divergence between fundamental value and investor sentiment across key sectors. While the defence sector faces short-term volatility, midcap IT continues to leverage technological shifts, and the banking sector navigates fresh regulatory and operational hurdles. Defence: Hindustan Aeronautics Limited (HAL) Investors are advised to maintain patience with HAL as the stock undergoes a period of price correction. Despite a robust order book of approximately **₹1,89,300 crore** providing revenue visibility through 2032, the share price has recently faced pressure. The stock touched an intraday low of **₹4,037** in late February 2026, marking a decline of over **13%** from its recent highs. This movement is largely attributed to sentiment shifts regarding future aircraft bidding processes and general profit-booking at current valuations. However, the company’s Q3 FY26 financials remain strong: * Revenue: **₹8,612.6 crore** (Up **11%** YoY) * Net Profit: **₹1,866.7 crore** (Up **29.65%** YoY) * Interim Dividend: **₹35 per share** Current valuations show a P/E ratio around **30.25**, which warrants caution for fresh entry. While the long-term outlook remains supported by the "Aatmanirbhar Bharat" initiative, short-term technical indicators suggest a bearish trend as the stock trades below its 50-day and 200-day moving averages. Midcap IT: AI-Driven Growth The IT sector presents selective opportunities in midcap players that have successfully pivoted toward artificial intelligence and next-gen mobility. **KPIT Technologies** reported Q3 revenue of **₹1,617 crore**, a **9.4%** year-on-year increase. The company is transitioning its strategy from Software-Defined Vehicles to "AI-Defined Mobility," embedding AI across the vehicle software lifecycle. Despite a recent net profit dip to **₹133 crore** due to one-time labour code charges, it remains a key player in the automotive technology space. **Mphasis** and **Datamatics** continue to see sustained interest as they integrate generative AI into enterprise workflows. Mphasis recorded Q2 FY26 revenue of **$406.2 million**, with its AI-led pipeline now accounting for nearly **65%** of its total deal flow. These firms are benefiting from a broader market trend where Indian IT is projected to grow its AI-related revenue contribution from **15%** to **20%** by the end of the fiscal year. Banking: IDFC First Bank IDFC First Bank is currently in a "trust repair" phase following significant operational headwinds. On February 23, 2026, the stock tumbled to a **20%** lower circuit, reaching **₹66.85**, after the bank disclosed suspected fraudulent transactions worth approximately **₹590 crore** at a regional branch. This event has rattled investor confidence, necessitating regulatory clarity before fresh exposure is recommended. While the bank had previously seen a **24%** price return over the last year, this recent shock has placed the stock roughly **23%** below its 52-week high of **₹87**. Investors should monitor the reconciliation process of the identified accounts. Fresh positions require a stabilized environment and a clear signal from regulators regarding internal control assessments. At a current Price-to-Book (P/B) ratio of **1.82**, the bank's valuation remains under scrutiny compared to its private-sector peers.