Seasonality Analysis
Sector
| Average August Return
| August 2026 (As of August 5)
| July 2026
|
Nifty IT
| 1.95%
| 1.86%*
| 16.77%
|
Nifty Auto
| 1.66%
| 2.13%*
| 8.55%
|
*As of August 5, 2026.
Source: Moneycontrol
1. Nifty IT
The Nifty IT index has staged a strong recovery over the past month. From its low of 25,796 points on July 1, the index has gained more than 23%. It touched a two-month high of 31,846 points on July 30 and is currently trading around the 31,300 mark.
The rally came after a difficult first half of the year. Earlier in 2026, the sector had corrected nearly 28% as investors worried about weak technology spending and uncertainty around global demand. July, however, brought a change in sentiment.
The April to June quarter is generally favourable for India's IT companies. Higher billing days, fresh project starts and seasonal demand usually support quarterly revenue. This time, earnings also turned out to be better than many investors had expected.
Another important factor was the shift in global technology investments. Over the last two years, money had largely moved towards semiconductor manufacturers, memory chip makers and AI infrastructure companies. In late July, many global hardware stocks witnessed a sharp correction as investors questioned whether the heavy spending on AI infrastructure would generate adequate returns in the near term.
For Q1 FY27, sentiment towards Indian IT companies was fragile ahead of the earnings season. However, quarterly results showed that enterprise technology spending had stabilised. Better deal wins and positive management commentary encouraged investors to return to the sector.
Infosys Led the Rally
Infosys Ltd carries the highest weight in the Nifty IT index at 29.23%. The company's share price has gained more than 20% since July 1.
The company signed large deals worth $3.6 billion during the June quarter, with 61% of these being net new contracts. However, it lowered its FY27 constant currency revenue growth guidance to a range of 1.5% to 3% from 1.5% to 3.5% earlier.
TCS Gains Over 25%
Tata Consultancy Services holds the second-highest weight in the index at 20.29%. The company's share price rose more than 25% since July 1.
During the quarter, the company reported a total contract value of $9.5 billion. It also disclosed that its annualised AI services revenue run rate had reached $2.6 billion.
2. Nifty Auto Hits All-Time High
The Nifty Auto index has also been one of the strongest performing sectors in recent weeks. Since July 1, the index has gained more than 10%. It opened July at around 26,585 points and is now trading close to 28,300 points. On August 5, it touched an intraday record high of 29,489 points.
Strong monthly sales numbers across the automobile industry have been the biggest driver of this rally. Maruti Suzuki India Ltd crossed the two lakh domestic sales mark for the first time. Tata Motors continued to benefit from healthy demand in the electric vehicle segment, while Hyundai reported a strong recovery after production-related issues.
Electric vehicles (EVs) became popular too. Electric car sales grew by 83% in India in July 2026. Tata Motors stood as the market leader with a market share of 42.5%, whereas M&M witnessed an increase of 126% in EV sales.
M&M Sales Grow 26% YoY
Mahindra & Mahindra holds the highest weightage in the Nifty Auto index. It is up more than 14% since July 1.
It reported total vehicle sales of 1,03,860 units during July 2026, with 26% growth compared to the previous year. The company's financial performance was strong too. In Q1 FY27, consolidated revenue and PAT increased by 28% and 34%, respectively.
Maruti Suzuki’s Domestic Sales Hit All-Time High
Maruti Suzuki India holds the second largest weight in the index and has also supported the sector's rally.
During July 2026, the company sold 2,41,421 vehicles. Domestic sales reached an all-time high of 2,00,123 units. Production also increased to 2,48,845 units compared to 1,87,073 units in the corresponding period last year. It reported revenue growth of 36.4% during Q1 FY27.
What Should Investors Watch in August?
Seasonality is never a guarantee of future returns. Past data suggests that IT and Automobile stocks have shown better returns in August as compared to other sectors.
Both sectors have benefited from improved fundamentals in 2026. IT companies have witnessed increased deals and recovered from the lows. Auto stocks have shown strong sales with rising EV demand.
