What sectors have driven the Nifty rally in the last 2 months?

When the Nifty closed the week on 31 July, it did close in the red but you cannot overlook the fantastic returns it has given in the last two months. Over June and July 2020, Nifty rallied by 16% with the gains almost divided equally between June and July. There have been a number of triggers for this rally in the last two months.

Nifty delivered returns of 7.35% and 7.49% in the months of June and July respectively. However, there were some underlying shifts that happened in these months. For example, In the month of June, it was private banks and PSU banks that were the stars of the rally with PSU banks gaining almost 26% in a month. That changed in July 2020.

July was more like a return to reality for financials or what we call mean reversion. July was dominated largely by the two sectors of IT and Pharma. These two sectors had lagged in the month of June. The June quarter results worked in favour of IT industry. IT majors like Infosys, Wipro and HCL Tech reported flattering numbers even as TCS held on to OPMs.

Auto stocks also did quite well in June and July as factories got back into action. However, the bounce comes on the back of a sharp fall over the last 2 years so it comes from a very small base. Hence, you must take the auto bounce with a pinch of salt. Metals were a surprise in July on hopes of a revival in China GDP boosted the fortunes of metal stocks.