Indian shares notch monthly gains as AI unwind, upbeat earnings draw foreign inflows

India’s equity benchmarks rose on Friday, securing a second straight monthly gain in July, as an unwinding global AI trade and resilient domestic earnings lured foreign investors back, helping offset crude price volatility due to the Iran war.

On Friday, Nifty 50 rose 0.27% to 24,383.60and Sensex gained 0.21% to 78,094.64, led by financial and automobile stocks.

Non-bank lender Bajaj Finance and automaker Mahindra & Mahindra rallied 8.3% and 3.5%, respectively after upbeat results.

The benchmarks gained 2.2% and 2.1%, respectively, in July, posting consecutive monthly advances for the first time this year. They gained 1.4% and 2.3%, respectively, in June.

The rally was powered by a 16.8% jump in the information technology index, its strongest monthly performance in six years.

A global AI-trade retreat drove investors from South Korean and Taiwanese shares into less-exposed Indian markets.

“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,” said Gaurav Didwania, fund manager and partner at Qode, a SEBI-registered PMS firm.

Foreign investors, who sold $29.3 billion of Indian equities in the first six months of the year, turned buyers in July, bringing in $1.6 billion. Reserve Bank of India’s measures to stabilise the rupee also supported sentiment.

“If crude prices settle down and Middle East tensions ease, India becomes a very attractive trade going forward, given domestic economic strength based on historical trends,” Didwania said.

Eleven of 16 major sectors ended July higher. Small-caps and mid-caps rose 2.5% and 1.8%, respectively.

Among stocks, HCLTech surged 25.7% this month after beating quarterly estimates and approving fresh investment in an Indian AI data centre.

Infosys, TCS and Tech Mahindra climbed between 12.9% and 17.6%.

Bajaj Auto rose 18.6% on strong quarterly profit, while Dr. Reddy’s fell 15.4% after a semaglutide supply disruption and quarterly earnings miss.