IT Short Covering Lifts Sensex as Oil Eases and FIIs Buy

The BSE Sensex advanced 75.71 points to 77,726.62 and the NSE Nifty rose 26.90 points to 24,275.85 in early trade on Thursday as IT stocks extended a sharp July rebound, foreign funds stayed buyers and Brent crude eased.

The move followed Wednesday’s 888-point Sensex jump and came even as US markets sold off hard after a hawkish Federal Reserve outcome.

The Open Numbers and Overnight Backdrop

Gains stayed modest after the prior session’s strong close. Sensex settled Wednesday at 77,654.60; Nifty finished at 24,250.20.

• Sensex early: +75.71 to 77,726.62
• Nifty early: +26.90 to 24,275.85
• Brent: -1.26% at $89.60 a barrel
• Prior FII: net buy ₹2,981.87 crore on July 29

Asian cues mixed. Japan’s Nikkei held positive while Korea’s KOSPI, Shanghai and Hang Seng traded lower. The rupee had firmed the previous day.

IT Unwind Behind the Green

Infosys, Tech Mahindra, HCL Tech and Tata Consultancy Services led the Sensex pack higher. The sector’s July run has been one of the market’s clearest stories.

Nifty IT gained nearly 16% in July and recovered more than 21% from its 52-week low of 25,699.10 hit on July 1. All ten index constituents traded green in recent sessions. Coforge, Infosys and LTIMindtree posted some of the sharpest individual moves.

The bounce arrived after months of underperformance. Indian IT had lagged global AI and semiconductor names earlier in the year. Weakness in those Asian chip stocks later flipped capital toward Indian services names that carry less direct manufacturing-cycle risk.

CNBC-TV18’s Nigel D’Souza highlighted the short covering power in Nifty IT, noting the index snapped a sluggish stretch lasting more than five expiries and that nearly $1.4 billion of futures open interest unwound across IT names on expiry day. That technical fuel helps explain why the sector could rise even while US technology sold off.

FII Return Meets Oil Relief

Exchange data showed FII net purchases of ₹2,981.87 crore on July 29 across NSE, BSE and MSEI. Domestic institutions added another ₹998 crore. Combined institutional buying topped ₹3,900 crore.

The single-day figure fits a broader July turn. Foreign investors had bought more than $2 billion of Indian equities earlier in the month after months of selling that reached nearly $28 billion in the prior outflow phase. Softer crude, a stabler rupee and better risk appetite helped.

Key supports for the flows:

• Brent’s pullback toward levels that ease India’s import bill and inflation path
• Rupee stability that reduces currency risk for overseas buyers
• Selective valuation repair after the earlier correction
• Ongoing Q1 earnings that have so far avoided major negative surprises in large IT names

Crude remains the swing factor. India imports the bulk of its oil. Any sustained rebound quickly feeds into the current-account math and the rupee. That is why the India’s oil-import exposure still shapes foreign positioning even on quieter days.

Winners Take the Index While Laggards Drift

Beyond the IT heavyweights, Mahindra & Mahindra and Sun Pharma also ranked among the major Sensex gainers. Mahindra’s EV push has kept auto-related names in focus for domestic investors even as the broader market digests global cues.

Adani Ports, Asian Paints, Eternal and Bharat Electronics sat among the laggards. Paint and port names often track oil and logistics costs more closely, so the same crude softness that helped sentiment elsewhere left some of those stocks under relative pressure.

Breadth stayed selective rather than universal. That pattern fits a rotation and covering story more than a broad risk-on surge.

Fed Hawkishness and the US Selloff

US markets closed sharply lower on Wednesday. The Dow fell 2.19%, the S&P 500 lost 1.52% and the Nasdaq dropped 1.74% amid renewed technology selling.

The U.S. Federal Reserve kept interest rates unchanged, but an unusually hawkish outcome with three policymakers dissenting in favour of a rate hike pushed long-dated Treasury yields close to two-decade highs.

Rajesh Palviya, Head of Research at Axis Direct, said the split decision left investors recalibrating the path of future cuts. Higher long-end yields tighten financial conditions globally and often pressure growth and technology valuations first.

India’s early resilience therefore stood out. Domestic flows and the IT technical rebound provided a buffer that US tech lacked overnight. Still, the same yield move that hurt Wall Street remains a medium-term headwind for emerging-market equities if it persists.

What the Technical Lift Leaves Exposed

The July IT recovery and the return of foreign buying look impressive on the tape. Yet several second-order risks sit just behind the numbers.

First, a large share of the Nifty IT advance came from short covering rather than fresh long-term allocation. Once the overhang of short futures is cleared, the next leg needs earnings delivery and deal pipelines to do the heavy lifting. Management commentary in the current results season will matter more than it did during the unwind.

Second, crude’s 1.26% dip to $89.60 helped sentiment on the day. The price remains elevated versus earlier 2026 lows. Fresh Middle East friction or shipping disruptions can reverse the relief quickly and re-price India’s import bill, inflation path and the rupee in the same week.

Third, the Fed’s three dissenters for a hike signal a more divided committee than markets had priced. Long-dated Treasury yields near multi-decade highs raise the hurdle for global risk assets. Indian equities have shown relative strength, but sustained higher US real rates historically slow foreign portfolio flows into emerging markets.

1. July 1, 2026: Nifty IT hits 52-week low near 25,699
2. Early-mid July: FIIs turn net buyers after months of selling; crude eases
3. July 28-29: IT multi-day surge, short covering peaks, Sensex jumps 889 points
4. July 30 early: Modest extension higher on residual IT strength and overnight oil dip

India VIX had eased toward 12, put-call ratios looked constructive and support held near 24,200 on the Nifty. Those technical cushions can fade if oil spikes or if the next batch of global data forces another upward reset in US rate expectations.

Domestic institutions and systematic retail flows continue to provide a floor that was thinner in earlier cycles. That structural change reduces the chance of a disorderly unwind. It does not eliminate the risk that a sharp oil rebound or another hawkish Fed surprise simply stalls the current recovery and forces another period of consolidation.

The open left Sensex and Nifty higher, IT stocks in the lead and foreign money still present. The durability of that combination now depends less on the covering already done and more on whether crude stays contained and whether corporate guidance can justify the rebound once the technical fuel runs lower.