Stock Market Today: Sensex, Nifty Advance On AI Rotation Trade; US Fed Decision In Focus

Stock Market Today: Equity benchmark indices started on a strong note on July 29, shrugging off the global AI sell-off as investors rotated into domestic IT stocks amid expectations that India could emerge as a beneficiary of the shift in global technology investments.

The BSE Sensex opened 657.85 points, or 0.86 per cent, higher at 77,423.77, while the NSE Nifty 50 gained 191.30 points, or 0.80 per cent, to start the session at 24,176.65.

The broader market also traded in positive territory. The Nifty Midcap 100 and Nifty Smallcap 100 rose around 0.50 per cent each in early trade. The Nifty 500, which represents more than 92 per cent of the free-float market capitalisation of all stocks listed on the NSE, also advanced over 0.50 per cent, indicating broad-based buying market capitalisations.

Meanwhile, India VIX, often referred to as the market's "fear gauge", fell as much as 8 per cent to 11.56. The volatility index reflects traders' expectations of market swings over the next 30 days based on Nifty options prices. A falling VIX generally signals improving investor confidence and expectations of relatively stable markets, while a rising VIX indicates heightened uncertainty and the possibility of sharper market moves.

The sharp rally added nearly Rs 3 lakh crore to investors' wealth, with the total market capitalisation of all BSE-listed companies rising to around Rs 482 lakh crore.

Domestic IT Stocks See Renewed Buying

Sectoral performance was broadly positive, with Nifty IT emerging as the top gainer, climbing more than 2.80 per cent as investors continued to accumulate technology stocks. With today's rally, the IT index has surged around 9.50 per cent.

Nifty Metal and Nifty FMCG followed, with both indices advancing over 1.50 per cent.

The rally was broad-based, with all sectoral indices trading in positive territory except Nifty Realty and Nifty Oil & Gas, which remained under pressure.

Meanwhile, Nifty Bank, which tracks the performance of 14 of the country's largest and most liquid banking stocks, was up 0.70 per cent at the time of writing.

Nifty 50 Top Gainers And Losers

Leading gains in the Nifty 50 index were Infosys, Larsen & Toubro, and Hindustan Unilever, all three rising more than 3 per cent. Following these, Tata Consultancy Services (TCS), Tata Consumer products, Bharti Airtel, Tech Mahindra, HDFC Bank, HCL Technologies, Wipro, ITC, Bajaj Auto, Max Healthcare, Eternal (formerly Zomato), Tata Motors Passenger Vehicle, and Nestle India gained between 1 per cent and 3 per cent.

On the other hand, capping the gains were InterGlobe Aviation, which fell over 1 per cent, followed by Bharat Electronics, Power Grid, Axis Bank, Coal India, Titan, ONGC, Adani Ports, and Dr Reddy's Laboratories.

Stocks Rally Despite Oil Spike

The gains came even as crude oil prices surged following Iran's “surprise attack” on US forces in the West Asia.

The international benchmark Brent crude oil futures jumped nearly 4 per cent to trade above $85 a barrel, while the US West Texas Intermediate (WTI), also spiked more than 4 per cent, to trade above $82 per barrel.

Tensions in West Asia escalated again after Iran launched multiple ballistic missiles at US forces in the region late July 28, according to US Central Command (Centcom). The military said all the missiles were intercepted.

In a post on X, Centcom said, "Islamic Revolutionary Guard Corps forces launched multiple ballistic missiles from Iran in an attempted surprise attack on US forces based in the Middle East."

Centcom did not say where the missiles were aimed, but Axios, citing US officials, reported that the target was a US military base in Jordan.

In response, Centcom said US and Saudi forces carried out strikes on "multiple terrorist logistics and weapons sites" in eastern Iraq. The military said the operation was launched after more than 30 drone attacks over the past three days by "Iran-aligned terrorists."

AI Sell-Off Intensifies

The global artificial intelligence (AI) sell-off deepened on July 29, with semiconductor stocks extending losses as investors questioned the sustainability of the AI spending boom ahead of earnings from some of Silicon Valley's biggest technology companies later this week.

South Korea bore the brunt of the rout. The benchmark Kospi index plunged another 10 per cent after crashing nearly 11 per cent in the previous session, dragged down by its technology heavyweights. So far this week, Samsung Electronics has slumped more than 22 per cent, while SK Hynix has shed nearly 28 per cent. Together, the two chipmakers account for more than half of the Kospi's weight, magnifying the benchmark's losses.

The selling pressure also spread across other major Asian markets. Japan's Nikkei 225 fell more than 2.50 per cent in early trade, taking its losses for the week to nearly 7 per cent.

Taiwan's Taiex declined more than 5 per cent, weighed down by Taiwan Semiconductor Manufacturing Co. (TSMC), which accounts for around 42-44 per cent of the index and fell over 4 per cent.

However, the weakness was not uniform across the region. Hong Kong's Hang Seng bucked the trend, rising nearly 1.50 per cent, while China's CSI 300 traded largely unchanged.

US Fed Rate Decision In Focus

The US Federal Reserve's rate-setting panel, the Federal Open Market Committee (FOMC), is widely expected to keep the benchmark interest rate unchanged at the 3.50-3.75 per cent range when it announces its policy decision later today.

The focus, however, will be on the central bank's guidance for the months ahead. For the September meeting, traders are pricing in a 56.10 per cent probability of a 25-basis-point hike and a 21.50 per cent chance of a larger 50-bais-point hike.