The BSE Sensex and Nifty 50 indices gained between 1-2% during July 2026, marking the second consecutive month of gains for Indian equity benchmarks. The BSE 500 and BSE Midcap indices recorded positive returns between 1-2%, while the BSE Smallcap index declined 0.1%. Nifty 50, Nifty Midcap 100, Nifty Smallcap 100 and Nifty 500 indices were up in the range of 1.4% to 2.1% during the month. The BSE Sensex, BSE 500 and BSE Midcap indices recorded positive returns between 1% and 2%, while the BSE Smallcap index was down 0.1%. According to INVasset, the sentiment towards equities turned favourable during the month as foreign institutional investors turned net buyers for the first time since February. The Nifty posted its biggest weekly gain in nearly four months, advancing more than 2.5% during the week ending July 31, as reported by CNBC TV18. Both benchmarks have ended July with gains in 19 of the past 25 years, with the Sensex ending Friday's session at 78,095, up 167 points, or 0.2%, and the Nifty closing at 24,384, gaining 67 points, or 0.3%. The total market capitalisation of BSE-listed firms rose by ₹12 trillion to ₹486 trillion.
Indian benchmark indices emerged among the best-performing global markets after staging a strong rebound from their early-July lows. The NIFTY50 gained 2.1% in July, while the SENSEX rose over 2%, extending their rally from June when both indices had risen by a little over 1%. The gains came despite heightened volatility and unfavourable movements in currency and crude oil, which remained key headwinds for domestic equities. Investor sentiment also remained cautious amid concerns over the Q1 FY27 earnings season. The June quarter was marked by elevated crude oil prices and an unfavourable geopolitical environment. India's outperformance comes at a time when global investors are turning cautious on the AI trade, with market valuations hovering in overheated territory. Some of the best-performing markets of 2026, including the KOSPI, NASDAQ, and Nikkei, have taken a back seat following sharp profit booking in AI-related stocks. Several of this year's top-performing AI stocks have corrected by as much as 50% from their peaks, dragging their respective benchmark indices down by nearly double digits.
BSE IT emerged as the standout performer, surging 16% during July, followed by NIFTY IT index surging nearly 17% in July, as reported by INVasset. BSE Consumer Durables (9.4%), BSE Realty (8.4%), and BSE Auto (5.9%) also showed strong performance. Consumer durables, Realty, Auto, Media, Pharma, Healthcare and Metal indices also rose between 2% and 11% during the month. NIFTY PSU Bank and Private Bank indices closed the month lower in range of 0.6% and 1.7%, respectively. BSE Fast Moving Consumer Goods (FMCG), Healthcare and Metal index were up in the range of 1.6% to 3%. On the downside, BSE Capital Goods and Power indices were the worst performers, falling 7.1% and 6.4%, respectively. The unwinding of the global AI trade benefited Indian information technology (IT) companies, with the Nifty IT index gaining 16.8% in July, recording its best monthly performance since July 2020 and being the best-performing sectoral index. The Nifty and the Sensex outperformed Asian peers in South Korea, Japan, Taiwan and China, and also outperformed the S&P 500 and the Nasdaq Composite.
HCL Technologies was the top gainer in the NIFTY50 index, surging 25.7% during the month after signing an AI deal worth an estimated $1.14 billion with a Europe-headquartered Fortune Global 50 company. Under the agreement, HCLTech will establish an AI-driven operating model to transform and manage the client's global digital workplace and enterprise network operations from July 2026 to December 2031, with an option to extend for an additional five years. Bajaj Auto, up 18.6%, Tech Mahindra, 17.6%, Tata Consultancy Services, 16.4%, and Eternal, 14.3% were the other top-performing Nifty stocks. Bajaj Finance, which rose 8.1% following upbeat quarterly results, was the best-performing Sensex stock and the biggest contributor to the index's gains. Dr Reddy's Labs, Axis Bank, Trent, Adani Ports, Bharat Electronics, HDFC Bank, HDFC Life Insurance, Tata Motors PV and Coal India fell between 5% and 17%. Over half of the BSE 500 stocks, which contributed 87% of the total market capitalisation of BSE listed companies, underperformed the market in July by recording gains of less than 1%.
Foreign portfolio investors (FPIs) made a net investment of ₹278 crore in July 2026, marking a significant turnaround from being net sellers to the tune of ₹49,340 crore in June, according to the latest data available on NSDL. Domestic institutional investors (DIIs) reported a net inflow of ₹2,260 crore, as reported by stock exchange data. The return of FIIs can be attributed to a selloff in artificial intelligence (AI) related shares in South Korea and other global markets as their valuations became highly expensive and market participants raised questions about their high debt levels. FPIs became net buyers of Indian equities after remaining net sellers for the previous four months, with their net purchases helping offset the impact of a surge in Brent crude prices amid renewed tensions in West Asia. Brent crude rose 18.3% to $87.8 per barrel. The flow picture turned, with FII cash-market selling collapsing to ₹9,680 crore, the smallest for the year, and the final sessions printing outright foreign buying alongside DII purchases of ₹34,703 crore for the month, noted Harshal Dasani from INVasset. So far in July, foreigners have bought shares over ₹10,000 crore — the first instance of buying since February. Market breadth was strong on Friday, with 2,522 stocks advancing and 1,722 declining.
The Nifty's Volatility Index or VIX, commonly used to gauge the market sentiment, fell 3.3% to 11.76 levels, with the gauge having fallen 12.2% in the past five sessions, indicating relief among traders. On Friday, foreign portfolio investors net bought shares worth ₹277 crore, while domestic institutions were buyers to the tune of ₹2,260 crore. The Nifty rose 66.45 points, or 0.3%, to close at 24,383.6, while the Sensex rose 166.49 points, or 0.2%, to end at 78,094.64. Among broader market markers, the Nifty Midcap 150 gained 0.5% and Nifty Small-cap 250 rose 0.4%, with these indices gaining 2% and 1.8% respectively for the week. Out of the total 4,425 stocks traded on the BSE, 2,522 advanced and 1,722 declined at close. The Nifty is approaching a make-or-break point after spending 15 weeks inside a 1,531-point range, with the index oscillating between 23,070 and 24,601 over the past 15 weeks, according to SBI Securities. The rebound has brought the Nifty within striking distance of the 24,550-24,600 resistance zone, where the next leg of the market will likely be decided. SBI Securities expects 24,550-24,600 to remain the crucial resistance zone, with a decisive breakout above 24,600 potentially propelling the Nifty towards 24,900 and potentially 25,200. Ajit Mishra from Religare Broking noted that the index has strengthened its bullish structure by surpassing the 200-day EMA, with the index appearing well-positioned to inch towards the 24,600 level and a decisive breakout above this zone could open the door for a move towards 24,800-25,000.
