Market Brief: Retail Trading Dynamics **February 23, 2026** Indian retail investors are increasingly adopting a "contrarian" stance, though data suggests this approach is challenging personal portfolio health. Recent market tracking reveals a persistent pattern: individual investors are aggressively buying stocks during sharp declines while liquidating positions as prices recover. While this behavior provides essential liquidity to the broader market, it has led to a noticeable divergence in returns. In the most recent quarter, retail holdings surged in over **1,019 companies** where share prices fell by an average of **8.6%**. Conversely, retail exposure was reduced in **1,092 companies** that saw price appreciation. Capital Flows and Market Anchors Domestic liquidity remains the primary stabilizer for Indian equities. Monthly SIP inflows have reached a historic range of **₹25,000 crore to ₹30,000 crore**, effectively cushioning the impact of volatile foreign outflows. Foreign Portfolio Investors (FPIs) have remained cautious, influenced by a weaker Rupee trading near **₹90.70** and shifting global yields. However, Domestic Institutional Investors (DIIs) continue to act as net buyers, frequently absorbing sell-offs with daily net purchases often exceeding **₹1,100 crore**. Sector Performance and Volatility Market sentiment is currently defined by sharp sectoral rotations. The **Nifty 50** and **Sensex** have faced pressure from a significant correction in the IT sector, which plunged over **8.2%** in a single week due to global technology shifts. * **Nifty 50** is hovering near the **25,800–26,000** resistance zone. * **Banking** remains a pillar of strength, with the **Bank Nifty** maintaining levels above **60,000**. * **Small-cap indices** have shown relative resilience, occasionally gaining while large-caps consolidate. The Cost of Active Trading Regulatory and fiscal changes are further impacting the profitability of frequent retail trading. Following the **Budget 2026** adjustments, the Securities Transaction Tax (STT) on derivatives has increased to **0.15%**. This change specifically targets high-frequency strategies. For active traders, these incremental costs can significantly erode net gains, particularly as historical data indicates that over **90%** of individual F&O participants have struggled to maintain profitability. Outlook on Domestic Demand Despite technical volatility, India’s economic fundamentals remain robust. GDP growth for the current fiscal year is projected between **7.5% and 7.8%**, supported by a decade-low average inflation rate of approximately **1.8%**. Retail participation has matured structurally, with direct plan adoption rising to **26%**. While "buying the dip" remains a popular retail tactic, the shift toward long-term systematic plans is providing a more stable foundation for the market compared to the speculative cycles of previous years.