The Nifty may have closed the week below the psychological resistance of 11,200, but the rally has still been quite strong. Over the months of June and July 2020, the Nifty rallied by 16% with the gains divided equally between the two months. What were the triggers for the Nifty rally; the best 2-month Nifty performance since the year 2009.
Drivers for the Nifty
While the Nifty performance in the months of June and July at 7.35% and 7.49% were almost the same, there were a number of subtle underlying shifts that happened in these months. In the month of June, it was the private banks and the PSU banks that were the stars. However, with the results season setting in, July was more a return to reality for financials. Instead, the month of July was dominated by IT and the Pharma space. These two sectors had lagged in the month of June. The June quarter results worked in favor of the IT industry. Infosys, Wipro and HCL Tech reported flattering numbers for the quarter while TCS managed to hold operating margins at attractive levels despite pressure on the top line. Auto stocks did well in both the months as the factories finally started churning out cars. However, the bounce comes on the back of a sharp fall over the last 2 years and must be taken with a pinch of salt. Metals were a rare surprise in July as hopes of a sharp revival in China GDP gave hopes of revival in metal stocks.