Indian equities posted their highest weekly gains in four months, aided by the return of foreign portfolio investors (FPIs), encouraging corporate earnings and a rebound in information technology (IT) and automobile stocks.
The Sensex ended Friday at 78,094.63, up 0.21%, while the Nifty 50 advanced 0.27% to 24,383.60. Over the week, the benchmarks gained 2.7% and 2.6%, respectively—their best performance since the week ended 10 April, when both indices had risen more than 5%.
IT and auto lead
IT stocks spearheaded the rally, with the BSE IT gaining 6.5% during the week. The BSE Auto Index rose 5.8%, while the consumer discretionary and consumer durables indices advanced 4% and 3.6%, respectively. Realty and metal stocks gained more than 2% each.
Power and utility stocks bucked the broader trend. The BSE Power Index declined 0.7%, while the utilities and capital goods indices fell 0.6% and 0.4%, respectively.
The rally in automobile stocks was supported by healthy volumes and demand. However, gains in IT appeared to reflect attractive valuations and short covering rather than the beginning of a clear earnings recovery, said Tanvi Kanchan, associate director at Anand Rathi Shares and Stock Brokers Ltd.
“Power and utility stocks witnessed profit-booking after their prolonged rally, as risk-on capital rotated towards other sectors,” she said.
Echoing the sentiment, analysts noted that the shift reflects the broader thematic realignment in the market. “The gains in IT and auto signal a rotation towards growth and consumption themes. Auto has better near-term earnings visibility, while IT will need stronger demand to sustain its rally. Power and utilities may consolidate after their recent gains, though their long-term outlook remains intact,” said Vinod Nair, head of research at Geojit Investments Ltd.
India outperforms
India was among the best-performing major equity markets during the week, with the Nifty 50 gaining 2.6%. Only Hong Kong and Vietnam performed better, rising 3.7% and 3%, respectively.
Brazil and Malaysia advanced 1.8% and 1.4%, respectively, while markets in Thailand, South Korea, Japan, mainland China and Taiwan ended the week lower.
“The rally was driven by gains in IT stocks, cooling crude prices and sustained domestic institutional buying. However, renewed geopolitical tensions or a hawkish US Federal Reserve could push oil and the dollar higher, threatening the market’s momentum,” said Vedant Gupte, co-founder and chief executive of investment platform Trackk.
FPIs return
FPI flows have also supported market sentiment. After four consecutive months of selling, FPIs turned net buyers in July, investing ₹15,412 crore in Indian equities.
The inflow followed net withdrawals of ₹49,340 crore in June, ₹32,963 crore in May, ₹60,847 crore in April and ₹1.17 trillion in March, according to data from the National Securities Depository Ltd.
Despite July’s turnaround, FPIs have withdrawn a net ₹2.59 trillion from Indian equities so far in 2026, significantly exceeding the ₹1.66 trillion pulled out during the whole of 2025.
“FPIs returned to Indian equities in July after four months of selling, but the sharp year-to-date outflow suggests this is a tentative return rather than a decisive shift,” Gupte said.
Earnings in focus
A busy earnings calendar will keep investors on their toes next week. Bharti Airtel Ltd will report its results on Tuesday, followed by Hindalco Industries Ltd and Power Grid Corporation of India Ltd on Wednesday. Trent Ltd will announce its earnings on Thursday, while Titan Co. Ltd and State Bank of India are scheduled to report on Friday.
Gupte said Airtel’s average revenue per user would indicate whether its pricing power and 5G monetization were improving. SBI’s net interest margin, meanwhile, would offer clues on whether pressure on banking profitability had begun to ease.
“Hindalco’s outlook for Novelis will be important, while Titan’s results will provide a clearer picture of whether premium consumption remained resilient despite elevated gold prices,” he said.
Kanchan expects financials, telecom, and select metal stocks to remain well-placed. However, she cautioned against chasing the IT rally without further confirmation from earnings. Crude oil prices and geopolitical developments remain the key external risks.