The Indian stock market opened higher in early trade on Friday, with the S&P BSE Sensex crossing 78,150 mark, rising 655 points to 78,036.63 and the Nifty 50 gaining over 200 points to trade at 24,344.30 as of 12:40 pm. According to The Hindu BusinessLine, the rally was led by information technology stocks after a softer-than-expected US jobs report eased concerns over near-term Federal Reserve rate hikes and boosted risk appetite for emerging markets. The overall market breadth remained positive with 1,843 advances, 1,345 declines and 104 unchanged stocks on NSE, while 130 stocks hit their 52-week highs and 56 touched 52-week lows. Market breadth remained positive with 2,057 advances and 993 declines on BSE, while 178 shares remained unchanged, indicating strong investor confidence across the market. India VIX, which measures volatility in the market, fell 2.19% to 12.02, reflecting reduced market uncertainty and improved investor sentiment.
The IT sector emerged as the top performer with the Nifty IT index extending gains for a second straight session, climbing 3% today to lead gains, with HCL Tech, Tech Mahindra, Max Healthcare, Eternal and Sun Pharmaceutical Industries among the top gainers in Nifty 50. As reported by The Hindu BusinessLine, Tata Steel, Bajaj Finserv and Bharat Electronics shares followed, rising more than 1% each, while M&M shares bucked the trend, falling nearly 1% on Friday morning. The sector's strong performance was driven by value buying amid profit-taking in stocks that benefited from the artificial intelligence (AI) trade in other Asian markets, as well as easing US inflation concerns and short covering in the domestic market. According to The Economic Times, IT companies derive a significant portion of their revenue from the North American market, and lower expectations of Fed's rate hikes along with low valuations are boosting the IT stocks. The strong performance helped the Nifty IT index rebound after four consecutive sessions of decline, making it the best performer of the day.
The broader market participation was more modest compared to the benchmark indices, with the Nifty Smallcap 100 rising 0.23% and the Nifty Midcap 100 adding 0.04%, as reported by The Hindu BusinessLine. Most sectoral indices traded in positive territory, led by Nifty IT, healthcare and realty, while the PSU Bank index declined more than 1%. However, consumer durables and auto stocks also traded lower, indicating selective sectoral performance. The mid-cap segment also participated strongly, with GVT&D, Hitachi Energy, PB Fintech and Tube Investments of India declining 4-9%, weighing on the index, while Mahindra & Mahindra Financial Services, National Aluminium Company, Aurobindo Pharma and 360 One WAM gained up to 4%. In the smallcap space, Zensar Technologies, Nuvama Wealth Management, PPL Pharma, Kaynes Technology and HSCL advanced 3-11%, while Welspun Corp, Force Motors, Jyoti CNC Automation and Star Health and Allied Insurance fell 2-5%.
The market rally was significantly supported by cooling Fed rate hike expectations, with traders now pricing in a 46.8% probability that the U.S. central bank will keep rates steady at its meeting on September 15-16, compared to a 35.8% chance a day earlier, according to The Economic Times. Westpac analysts noted that the tepid jobs data doused traders' expectations of an imminent rate hike and raised the odds that the Fed will keep rates on hold until October. This development is particularly beneficial for IT stocks, as IT companies derive a significant portion of their revenue from the North American market, and rate hikes or a spike in inflation in the US can weigh on discretionary spending. Additionally, FII outflows have tapered off, with foreign portfolio investors being net sellers of ₹311.82 crore, while domestic institutional investors were net buyers of ₹1,784.40 crore in the Indian equity market on July 2, 2026, indicating strong domestic institutional support for the market rally.
The Indian market rally occurred against a backdrop of mixed global cues, with the Dow Jones Industrial Average rallying 594.83 points, or 1.14%, for a record close of 52,900.07 as investors reacted to a weaker-than-expected nonfarm payrolls report for June, while the Nasdaq dropped 0.8% to 25,832.67, as reported by Business Standard. Overnight in the US, the iShares Semiconductor ETF shed 5.6% led by losses in Teradyne, KLA, Entegris, Lam Research, and Marvell Technology — the second consecutive session of decline. Brent crude for September 2026 settlement gained 41 cents or 0.57% to $72.21 a barrel, providing key support to Indian markets, with crude at its lowest level since late February reducing inflationary concerns for India as a major oil-importing economy. Rajesh Palviya, Head of Research, Axis Direct, noted that the rally was "driven by a sharp rebound in IT stocks, with Infosys soaring nearly 6% and TCS gaining over 4%" in Thursday's session, with Auto and Realty stocks adding to the momentum, as reported by The Hindu BusinessLine.
