Indian stock markets ended higher for the third straight session on Friday, July 31, but lagged behind several major Asian markets, where technology stocks continued to drive a strong rally.
The Sensex and Nifty closed with modest gains of around 0.2%, supported by healthy corporate earnings, steady foreign investor buying and strength in banking, automobile and select media stocks. However, losses in information technology and FMCG shares limited the overall rise.
Elsewhere in Asia, investor sentiment remained much stronger. Japan's Nikkei 225 surged nearly 4%, making it the best-performing major market of the day as semiconductor and AI-related stocks extended their gains. South Korean and Taiwanese markets also closed higher on continued buying in chipmakers, while Hong Kong's Hang Seng posted a modest gain. Chinese mainland markets ended mixed as investors remained cautious over the domestic economic outlook.
Reuters wrote on Friday that global stocks rallied after strong earnings from Amazon and Microsoft restored investor confidence in the AI trade, while currency traders remained alert for further intervention after Japanese authorities were believed to have stepped in the previous day to support the yen.
The difference in performance reflected two contrasting themes. Technology-heavy Asian markets benefited from renewed optimism over artificial intelligence and semiconductor demand, while Indian markets were supported mainly by strong domestic fundamentals, including resilient earnings, steady foreign capital inflows and confidence in the country's economic growth.
According R Ponmudi, CEO at online trading and wealth tech firm Enrich Money, India's Nifty opened marginally higher, extending the previous session's gains, and remained supported by earnings-driven optimism and a temporary revival in foreign institutional inflows.
"Automobiles, financial services and Oil & Gas sectors emerged as the best-performing sectors, with Mahindra & Mahindra's stronger-than-expected first-quarter results continuing to underpin sentiment across the auto space," he added.
Despite underperforming some regional peers on Friday, Indian equities finished July on a strong note. Both the Sensex and Nifty recorded a second consecutive month of gains, helped by sustained foreign investor inflows, solid corporate earnings and improving market sentiment.