Sensex, Nifty Slip Then Recover as Domestic Funds Buy Dip

India’s benchmark indices fell sharply on July 8 and recovered within days as domestic buyers stepped in. The Sensex dropped 1,677 points, a 2.15% decline, while the Nifty 50 fell 2.12% to close at 23,882.05. Markets moved after renewed fighting between the United States and Iran pushed crude oil higher and the rupee weakened.

Crude oil rose about 6% on the news and the rupee fell to roughly 95.5 per dollar. Foreign institutional investors registered net selling during the two-week period, including a net outflow of about 3,062 crore rupees on July 13. Domestic mutual funds and other institutions added roughly 2,000 to 3,000 crore rupees on many trading days and bought 2,928 crore rupees on July 14, providing buying support.

Two days after the selloff, the market rallied. On July 10 the Sensex gained 828 points and the Nifty rose to 24,207, led by banking stocks and early optimism around quarterly earnings. By July 15 the Nifty was testing levels above 24,190 after softer U.S. inflation data affected expectations for U.S. interest rates.

Financial names including Bajaj Finance, Axis Bank and State Bank of India led gains during the rebound. Information technology and metals counters underperformed on several sessions while oil-related costs remained elevated, reflecting sensitivity to input prices and global demand.

India’s digital payments network continued to expand while equities moved. The National Payments Corporation of India reported that the Unified Payments Interface processed 241.6 billion transactions in fiscal 2025–26, transferring more than 314 lakh crore rupees. The system now supports over 731 million UPI QR codes. The International Monetary Fund has noted that UPI accounts for close to half of real-time payment transactions globally and several countries are studying elements of the model.

The government expanded semiconductor incentives by more than 1.25 lakh crore rupees, about $15 billion, for fabrication, packaging and design projects. Tata Electronics announced a chip fabrication plant in Gujarat with partner Powerchip as part of a group of 12 approved semiconductor projects. NITI Aayog set an industry target of capturing 10% to 13% of the global semiconductor market by 2035, linked to an estimated $120 billion to $150 billion value chain.

Demographic figures and growth projections remain central to policy planning. India’s population is about 1.48 billion, with a working-age share estimated at 66% to 68%. The International Monetary Fund projects 6.4% growth for the 2026–27 fiscal year.

Regulation of crypto assets remains restrictive. India taxes gains on virtual digital assets at a flat 30% and applies a 1% tax deducted at source on transfers. About 54 crypto service providers are registered with the financial intelligence unit, serving roughly 39 million verified users who hold about $2.1 billion in assets. The Reserve Bank of India has advised banks to avoid exposure to private cryptocurrencies and stablecoins. A comprehensive crypto bill has not been finalized.

Government agencies are using permissioned blockchain systems for administrative purposes. The All India Institute of Medical Sciences in Delhi used blockchain for faculty recruitment records, the Cotton Corporation of India tracks cotton bales through a blockchain-based identification system, and the aviation regulator is developing a blockchain-linked platform for digital services.

During the market volatility, domestic mutual funds and institutional buyers provided net purchases that helped limit further declines. Payment volumes, semiconductor project approvals and ongoing crypto rules proceeded amid the trading swings.