Sensex And Nifty Gain In July Even As Over 50% BSE 500 Stocks Underperform Benchmarks

The Sensex and Nifty 50 closed July in the green with help from the IT stocks as well as select buying following the quarterly results season in June. Despite the advance in headline indices, a majority of stocks within the broader market failed to match benchmark returns, reflecting stock-specific performance across sectors.

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Most BSE 500 Stocks Underperformed

More than half of the companies in the BSE 500 Index, which together account for nearly 87% of the market capitalisation of all BSE-listed firms, delivered returns of less than 1% during July.

A total of 280 stocks in the index declined during the month, with losses extending up to 22%. In comparison, the BSE Sensex, BSE 500 and BSE Midcap indices posted gains of around 1% to 2%, while the BSE Smallcap Index slipped 0.1%.

On the National Stock Exchange, the Nifty 50, Nifty Midcap 100, Nifty Smallcap 100 and Nifty 500 advanced between 1.4% and 2.1% over the same period.

IT Stocks Lead Market Gains

The information technology pack emerged as the strongest-performing sector in July. The BSE Information Technology Index climbed 16%, outperforming all other sectoral indices.

Consumer Durables rose 9.4%, followed by Realty at 8.4% and Auto at 5.9%. FMCG, Healthcare and Metal indices also ended the month higher, registering gains ranging from 1.6% to 3%.

According to Ajit Mishra, SVP–Research at Religare Broking, encouraging June quarter earnings from select companies and continued strength in IT stocks supported investor sentiment, although geopolitical developments in the Middle East and higher crude price levels remained key factors influencing markets.

Ponmudi R, CEO of Enrich Money, said Indian IT companies benefited from their services-led business models, resilient earnings outlook and relatively attractive valuations. He added that as valuations in the global semiconductor segment became more expensive, institutional investors selectively increased exposure to software and IT services companies expected to benefit from wider artificial intelligence adoption.

Stock Performance Varied Widely

Among individual stocks, Kalyan Jewellers India share price recorded one of the strongest performances, gaining 63% during July. eClerx Services share price, C E Info Systems share price, Lodha Developers share price, HEG share price, Info Edge (India) share price, L&T Technology Services share price, HCL Technologies share price and Persistent Systems share price rose between 26% and 46%.

On the other hand, Dr Reddy’s Laboratories share price, Bandhan Bank share price, Thermax share price, Tejas Networks share price, Suzlon Energy share price, GE Vernova T&D India share price, Siemens Energy India share price and Gujarat Energy share price declined between 15% and 20%.

FPI Buying Supports Market Sentiment

Capital Goods and Power were the weakest-performing sectors during July, with their respective BSE indices falling 7.1% and 6.4%. Telecommunication, Nifty Bank and Nifty PSU Bank indices also ended the month lower.

According to Vinod Nair, Head of Research at Geojit Investments, domestic equities remained range-bound as investors balanced global uncertainties, including U.S. interest rate expectations and higher crude price volatility, against resilient domestic fundamentals. He added that stronger foreign portfolio inflows, a firmer rupee and encouraging corporate earnings supported selective buying.

Data from NSDL showed that foreign portfolio investors made net purchases of ₹15,412 crore in July after four consecutive months of selling. Stock exchange data also showed domestic institutional investors recorded net inflows of ₹32,839 crore, providing additional support to the market during the month.