Indian Equities Surge on July 2nd, Sensex Jumps 579 Points as IT Sector Rallies
The rally was fueled by easing global inflation concerns after softer US jobs data and a drop in crude oil prices, setting a positive tone for markets.
The story
Indian equity markets concluded Thursday, July 2nd, on a strong note, with the Sensex surging 579.48 points, or 0.75%, to close at 77,502.12. The Nifty 50 also advanced by 169.85 points, or 0.71%, settling at 24,175.70.
A significant driver of this upward movement was a robust rally in the IT sector, with the Nifty IT index climbing nearly 5%. Key contributors included Infosys, which jumped 5.84%, alongside strong gains in Tech Mahindra (+4.61%), HCLTech (+4.44%), and TCS (+4.43%).
On the flows front, Foreign Institutional Investors (FIIs) were net sellers, offloading equities worth ₹311.82 crore on July 2nd, while Domestic Institutional Investors (DIIs) provided strong buying support, with net purchases of ₹1,784.40 crore. Global cues played a role, as softer-than-expected US nonfarm payrolls data for June eased fears of aggressive Federal Reserve rate hikes.
Additionally, crude oil prices declined for a second consecutive session, with Brent crude trading near $71 per barrel, alleviating inflationary concerns for India. The India VIX, a measure of market volatility, also saw a notable drop of 5.32% to 12.54. Markets opened higher again on Friday, July 3rd, with the Sensex up 500 points and Nifty gaining 150 points.
The tape
| Instrument | Last | Change |
|---|---|---|
| Nifty 50 | 24,175.70 | +169.85 (+0.71%) |
| Sensex | 77,502.12 | +579.48 (+0.75%) |
| Bank Nifty | 57,970.00 (estimated) | -0.11% |
| USD/INR | 94.3100 | Higher (vs. 95.3550 prev. close) |
| India 10Y Yield | 6.718% | +0.07% |
| India VIX | 12.54 | -5.32% |
Flows & data
| Item | Reading | Read |
|---|---|---|
| FII Net Flow | ₹-311.82 crore (July 2, 2026) | Foreign institutional investors were net sellers of Indian equities. |
| DII Net Flow | ₹1,784.40 crore (July 2, 2026) | Domestic institutional investors continued to provide buying support. |
| SIP Inflows | ₹30,954 crore (May 2026) | Systematic Investment Plan contributions remained strong. |
| Mutual Fund AUM | ₹81.58 lakh crore (May 2026) | Total assets under management for the mutual fund industry. |
IPOs & the primary market
The primary market saw activity with IC Electricals Company Limited's IPO opening for subscription today, July 3rd, and set to close on July 7th. The SME IPO aims to raise ₹47.91 crore with a price band of ₹94-99 per share.
Grey Market Premium (GMP) for IC Electricals stood at ₹40 as of July 2nd, hinting at a potential 40.40% listing premium. Meanwhile, Knack Packaging's IPO, which opened on July 1st, is scheduled to close today, July 3rd.
It has an issue size of ₹439.5 crore with a price band of ₹161-170 per equity share. Several other SME IPOs, including Sampark India Logistics and Atharva Polyplast, closed on July 2nd, having opened on June 30th.
Valuation watch — India & global
India's market valuation continues to be a point of discussion. The Nifty 50 Price-to-Earnings (PE) ratio was recorded at 20.85 as of July 2nd, 2026, which is considered to be in the 'fairly valued' zone.
This compares to a 10-year median PE of 23.43 for the Nifty 50. Globally, there are signals of froth, particularly with continued selling in AI-related shares.
Concerns are emerging that the enthusiasm surrounding artificial intelligence may have outpaced underlying fundamentals. While the Dow Jones Industrial Average hit a record high on Thursday, the tech-heavy Nasdaq Composite declined, primarily due to a sell-off in semiconductor stocks. This divergence highlights selective exuberance and caution across different market segments.
Monsoon watch
The Southwest Monsoon has shown further advancement, covering additional parts of Gujarat, the remaining areas of Uttar Pradesh, entire Delhi, most of Madhya Pradesh, Haryana & Punjab, and some parts of Rajasthan by July 2nd, 2026. However, the India Meteorological Department (IMD) has forecasted that rainfall for July 2026 is likely to be below normal, specifically less than 94% of the long-period average.
This follows a significant countrywide rainfall deficit of 40% recorded in June. The below-normal forecast for July raises concerns about potential food inflation, with some reports suggesting CPI inflation could exceed 4.5%, and a delayed recovery in rural demand, impacting sectors like FMCG and auto.
What we'll be watching
- The Board of Trade meeting on July 3, 2026, to finalize strategies for boosting India's merchandise exports.
- The start of the Q1 FY27 corporate earnings season in mid-July, led by IT giants like TCS, Infosys, and HCLTech.
- The release of India's June CPI (Consumer Price Index) data on July 12, 2026.
- The release of India's June WPI (Wholesale Price Index) data on July 14, 2026.
- The closing of the IC Electricals IPO on July 7, 2026, and its tentative listing on July 10, 2026.
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