Indian Equities Rebound on July 1st, Sensex Jumps Over 370 Points; Monsoon Concerns Persist
Markets found support from global cues and select sectors, though July's below-normal monsoon forecast remains a watchpoint.
The story
Indian equity markets saw a positive start to July, rebounding on Wednesday after two consecutive sessions of losses. On June 30th, the Sensex fell 250 points, or 0.33%, to close at 76,478.67, while the Nifty 50 declined 81 points, or 0.34%, to 23,865.75, primarily dragged down by heavy selling in IT majors such as Infosys, TCS, and HCL Tech.
However, on July 1st, both benchmark indices opened higher, with the Sensex climbing over 370 points to 76,854.77 and the Nifty gaining more than 110 points to 23,977.75 in live trading. This rebound was supported by positive global market trends and buying interest in sectors like auto, media, and FMCG.
Despite the market recovery, underlying concerns include ongoing geopolitical developments in West Asia and a weaker-than-expected monsoon forecast for July. Foreign Institutional Investors (FIIs) remained net sellers, offloading ₹2,556.75 crore on June 30th and ₹2,556.80 crore on July 1st, while Domestic Institutional Investors (DIIs) provided strong support, buying ₹6,842.34 crore and ₹6,842.30 crore respectively on those days.
The tape
| Instrument | Last | Change |
|---|---|---|
| Nifty 50 | 23,977.75 | +112.00 |
| Sensex | 76,854.77 | +376.10 |
| Bank Nifty | 57,542.90 | -184.45 (-0.32%) |
| USD/INR | 94.69 | +0.02 |
| India 10Y yield | 6.764% | +0.16% |
| India VIX | 13.45 | -1.13% |
Flows & data
FII Net Flows
Reading: -₹2,556.80 Cr (July 1, 2026)
Read: Foreign institutional investors continued to be net sellers in the cash segment.
DII Net Flows
Reading: +₹6,842.30 Cr (July 1, 2026)
Read: Domestic institutional investors provided significant buying support to the market.
June Rainfall
Reading: 39.9% below benchmark (June 2026)
Read: June recorded one of the driest monsoons in over a century, impacting agricultural prospects.
July Monsoon Forecast
Reading: Below-normal (<94% of LPA) (July 2026)
Read: The India Meteorological Department predicts subdued rainfall for the crucial month of July due to El Nino.
Kharif Sowing
Reading: Down 23% year-on-year (till June 27, 2026)
Read: Delayed monsoon progress has resulted in a significant lag in kharif crop planting compared to last year.
IPOs & the primary market
The SME primary market remains active, with several issues opening for subscription this week. Six SME IPOs opened on June 30th, aiming to collectively raise nearly ₹193 crore, and will close by July 2nd.
Among these, IC Electricals Co. is the largest, seeking ₹47.91 crore, and commanded the highest Grey Market Premium (GMP) of 28% over its issue price. Atharva Polyplast also saw a 13% GMP.
Knack Packaging's IPO opened for bidding on July 1st and closes on July 3rd, having been subscribed 0.52 times as of mid-day on July 1st. Aastha Spintex's IPO, which opened on June 29th and closes today, July 1st, was subscribed 1.99 times. TMC Transformers recently filed papers with SEBI for a ₹550 crore IPO.
Valuation watch — India & global
Indian markets entered July with the Nifty consolidating within the 23,800-24,200 range, with analysts suggesting a breakout from this zone could set the trend for the month. The Nifty is currently trading at approximately 19 times its forward earnings, which is considered comfortable when compared to its historical average of 20.5 times.
Globally, Wall Street concluded its strongest quarter since 2020 on June 30th, with the Dow Jones closing at a record 52,319 and the Nasdaq and S&P 500 also seeing significant gains, partly driven by AI-related technology optimism. Japan's Nikkei 225 also reached fresh record highs. However, rising equity financing costs are noted as a potential shadow over the global rally.
Monsoon watch
India's monsoon progress is a key concern, with the India Meteorological Department (IMD) forecasting 'below-normal' rainfall for July, expected to be less than 94% of the long-period average (LPA). This follows a particularly dry June, which recorded rainfall 39.9% below the benchmark, making it one of the driest Junes in over a century.
The evolving El Nino conditions are cited as a primary reason for the subdued outlook. The delayed monsoon has already impacted kharif sowing, which is down 23% year-on-year as of last Friday.
Reservoir water levels were also at 26% of capacity on June 25th. Despite the overall below-normal forecast, the IMD anticipates an improvement in monsoon activity in the first half of July, particularly in central India, which could aid paddy and other crop sowing. Heavy rainfall has already intensified over parts of the west coast, including Kerala, coastal Karnataka, Goa, and Maharashtra.
What we'll be watching
- Closure of IC Electricals IPO (July 2, 2026)
- Closure of Knack Packaging IPO (July 3, 2026)
- Closure of Kratikal Tech IPO (July 2, 2026)
- Q1 corporate earnings season begins (July)
- Upcoming debt auctions and GDP data releases
- RBI Monetary Policy Committee meeting (August 2026)
Reporting + analyst voices: grounded via Google Search at publish time.