Benchmark equity indices closed higher on Friday, extending their winning streak to a second consecutive month as strong quarterly earnings from Bajaj Finance and Mahindra & Mahindra boosted financial and automobile stocks, offsetting weakness in information technology shares.
The BSE Sensex advanced 166.49 points, or 0.21%, to settle at 78,094.64, while the NSE Nifty50 gained 66.45 points, or 0.27%, to close at 24,383.60.
Financial and auto stocks led the day's rally. Bajaj Finance surged 8.11% after posting robust quarterly earnings, emerging as the top gainer on the Sensex. Bajaj Finserv climbed 6.60%, Mahindra & Mahindra rose 3.58%, Adani Ports gained 2.12%, Tata Steel added 1.52%, and Reliance Industries advanced 1%.
The gains came despite continued profit booking in information technology stocks. TCS declined 2.73%, Infosys slipped 2.26%, Eternal fell 2.72%, Tech Mahindra lost 1.03%, and HCLTech shed 0.50%, making IT the biggest drag on the benchmark indices after a strong rally earlier this month.
Sectoral performance remained mixed. The Nifty Auto index emerged as the top performer with a gain of 1.64%, while Financial Services Ex-Bank surged 2.91%. The Media index climbed 2.09%, Financial Services rose 1.17%, Oil & Gas gained 1.08%, and Pharma advanced 0.72%. In contrast, the Nifty IT index fell 1.56%, while FMCG declined 1.05%.
The broader market also ended in positive territory. The Nifty 100, Nifty 200 and Nifty 500 each gained around 0.46%, while the Nifty Midcap 50, Midcap 100 and Smallcap 100 rose about 0.4%. India VIX declined 3.29% to 11.76, signalling easing market volatility.
The rupee strengthened on Friday, ending at 95.38 against the US dollar, up 0.3% for the day and registering its strongest weekly gain since March. However, the currency still fell around 0.7% during July as higher crude oil prices, driven by renewed tensions in the Middle East, weighed on sentiment.
Brent crude traded at around $88.16 per barrel, taking its monthly gain to nearly 21%, while WTI crude stood at $82.24 and was on track to rise about 18% during July, ending two straight months of declines for both benchmarks.
Friday's gains helped both benchmark indices post a second successive monthly advance for the first time this year.
The Sensex climbed approximately 2.1% in July, while the Nifty gained 2.2%, building on their respective advances of 2.3% and 1.4% recorded in June.
The information technology sector was the standout performer during the month. Despite Friday's decline, the Nifty IT index surged 16.8% in July, marking its strongest monthly performance in six years. The rally was fuelled by a global shift towards Indian technology stocks as investors reduced exposure to AI-focused markets such as South Korea and Taiwan.
Among the top monthly gainers, HCLTech soared 25.7% after reporting better-than-expected quarterly earnings and announcing fresh investment in an AI data centre in India. Infosys, TCS and Tech Mahindra also posted gains ranging between 12.9% and 17.6% during the month.
Foreign institutional investors (FIIs), who had sold nearly $29.3 billion worth of Indian equities during the first six months of the year, turned net buyers in July by investing around $1.6 billion. Analysts attributed the improvement in market sentiment to the return of overseas investors, resilient corporate earnings and measures taken by the Reserve Bank of India to support the rupee, despite elevated crude prices and geopolitical uncertainty.
Gaurav Didwania, Fund Manager and Partner at Qode, a Sebi-registered PMS firm, said the change in global investment preferences had provided additional support to Indian equities.
"The shift from AI-driven frenzy to more broad-based earnings growth in India has attracted global investors, adding another layer of strength to domestic markets," he said.
He added that if crude oil prices stabilise and geopolitical tensions in the Middle East ease, India could become an even more attractive investment destination due to its strong domestic economic fundamentals.
