Indian stock market weekly review: Aug 3-7, 2026

Indian equity benchmarks closed the holiday-shortened week of August 3–7, 2026, with modest gains, extending their winning streak to a second week. The BSE Sensex rose 0.6% while the NSE Nifty added 0.5%, helped by broad-based buying in IT and banking counters. Positive global cues, including a rebound in US markets and stable crude oil prices, provided the backdrop.

IT and banking lead the charge

Information technology stocks were among the top gainers, with the Nifty IT index climbing over 2% during the week. Heavyweights such as Infosys, Tata Consultancy Services, and HCL Technologies advanced on renewed optimism about deal pipelines and a softer dollar. Banking and financial services also contributed significantly, with the Nifty Bank index rising about 1%, supported by healthy quarterly earnings and expectations of stable credit growth.

Private lenders like HDFC Bank and ICICI Bank saw steady buying, while select public sector banks also gained. Analysts noted that the sector's resilience came despite concerns over margin pressure, as deposit growth remained a watchpoint.

Midcaps steal the show

Broader markets outperformed their large-cap peers, with the BSE Midcap index adding 1.8% and the BSE Smallcap index rising 2.1%. Investor interest shifted to mid-sized firms across autos, capital goods, and consumer durables, which delivered strong quarterly numbers. The trend suggests that risk appetite remains intact, even as valuations in some segments appear stretched.

Market breadth was positive throughout the week, with advancing stocks comfortably outpacing decliners on the BSE. The advance-decline ratio averaged above 1.5, indicating that the rally was not narrow, but spread across sectors.

Foreign flows turn positive

Foreign institutional investors (FIIs) emerged as net buyers during the week, purchasing equities worth about ₹4,200 crore in the cash segment. This marked a reversal of the selling trend seen in the previous month. Domestic institutional investors (DIIs), however, were net sellers, offloading shares worth roughly ₹3,100 crore, as they booked profits at higher levels.

The shift in FII sentiment was attributed to easing US inflation worries and a stable rupee, which traded in a tight band around 83.7 against the dollar. Provisional exchange data showed that FII buying was concentrated in financials, IT, and energy stocks.

Commodities and global cues

Crude oil prices remained range-bound, with Brent hovering near $85 per barrel, easing fears of imported inflation. Gold, however, slipped marginally as the dollar steadied. Global markets were largely supportive, with the S&P 500 and Nasdaq posting gains on the back of upbeat earnings and expectations that the Federal Reserve may pause its rate hike cycle.

Back home, the monsoon progressed well, raising hopes of a strong kharif harvest, which could keep food inflation in check. Government bond yields were stable, with the 10-year benchmark trading around 7.1%.

What to watch next week

Looking ahead, traders will keep an eye on US inflation data, due next week, which could influence global risk sentiment. On the domestic front, monthly auto sales figures and industrial production numbers are expected. Analysts say the market may consolidate with a positive bias, but caution that stretched valuations and any spike in oil prices could trigger profit-booking.

The earnings season is largely behind, so stock-specific moves will likely take a backseat to macro cues. A sustained FII inflow, along with a stable rupee, would be key to extending the rally. For now, the undertone remains constructive, but volatility is never far away.