Equities Edge Higher; Bond Yields Continue Upward Move

HIGHLIGHTS

• FSIB recommends R Doraiswamy for LIC’s MD and CEO 
• Talbros Automotive gain up to 8% after bagging orders worth ₹5.80 billion
• NSDL is said to plan $400 million IPO for July
• Waaree Energies gain up to 4% on international supply order for 599 MW solar modules
• Jio BlackRock secures SEBI nod to operate as investment adviser

Indian equities ended mixed on Wednesday, with benchmark indices extending their winning streak to a sixth consecutive session, supported by strong gains in information technology, and oil and gas stocks. However, broader market indices, particularly midcaps, lagged behind, reflecting selective investor interest.

The Nifty 50 held firm, but the Nifty Bank index fell 169 points, or 0.3%, to close at 56,460, dragged down by weakness in key financial stocks. Selling pressure in major lenders limited broader gains, though defensives and export-oriented sectors helped cushion the downside.

Sectoral Performance
Among sectors, FMCG, Power, and PSU Bank declined between 0.5% and 1%, reflecting weakness in domestic-focused counters. In contrast, Oil & Gas, Pharma, and IT sectors posted gains of 0.5% to 1.2%, showcasing investor preference for global and resilient plays.

IT stocks remained in favour, with the Nifty IT index rising 1%. WIPRO led the pack with a 2% gain after a 2% equity stake changed hands via block deals, signaling institutional interest. Oil & gas stocks also gained, driven by optimism after the U.S. Energy Information Administration projected Brent crude prices to decline to $59 per barrel by 2026. This positive outlook lifted oil marketing companies by 3–4%, boosting the overall sector.

Despite subdued action in midcaps and financials, the continued strength in IT and energy helped keep headline indices in the green. Investors appear to be positioning cautiously, favouring defensives and exporters amid global uncertainties and sector-specific cues

Top Gainers	% Change	Top Losers	% Change
NIFTY OIL & GAS	1.47%	NIFTY PSU BANK	-0.88%
NIFTY IT	1.26%	NIFTY FMCG	-0.67%
NIFTY PHARMA	0.50%	NIFTY BANK	-0.30%
NIFTY HEALTHCARE INDEX	0.25%	NIFTY FINANCIAL SERVICES	-0.29%
NIFTY AUTO	0.19%	NIFTY PRIVATE BANK	-0.26%

Indian government bond yields rose on Wednesday, with the benchmark 10-year yield climbing amid continued profit-booking, following the Reserve Bank of India’s unexpected 50 basis point repo rate cut and a shift in policy stance.

At its June 6 Monetary Policy Committee meeting, the RBI announced its steepest rate cut in five years and moved to a neutral stance, signaling a pause in its easing cycle. Additionally, it reduced the cash reserve ratio, further boosting short-term liquidity.

Initially, bond prices rallied on the back of the surprise measures, with traders anticipating sustained dovishness. However, as markets absorbed the RBI's forward guidance, expectations for further rate cuts diminished. This prompted profit-booking, particularly in longer-duration bonds, leading to a rise in yields.

The 10-year benchmark yield, a key indicator of investor sentiment, reflected this reversal by moving higher during the session, erasing earlier gains. Traders were cautious, re-evaluating the sustainability of accommodative policy, especially with inflation risks and global interest rate trends in view.

Adding to the shift in sentiment, the RBI announced it would cease daily liquidity injections into the banking system. Between December and May, the central bank had infused a record $100 billion, but the move to pause reflects the RBI’s assessment that further monetary easing may no longer be necessary.

The bond market now appears to be recalibrating, with investors focusing more on guidance than headline rate cuts. Going forward, clarity on inflation trajectory and global cues will likely steer bond yield direction in India.

Tenure	Today	Previous
10-year Gilt	6.31%	6.29%
5-year gilt	6.00%	5.95%
5-year OIS	5.76%	5.73%

The Indian rupee ended marginally higher on Wednesday, maintaining a narrow trading range for the third straight session. This stability reflected mixed client flows and a lack of decisive cues to guide currency direction. The rupee closed at 85.51 against the US dollar, slightly stronger than Tuesday’s 85.6025.

Implied volatility for the dollar-rupee pair—seen as a measure of market expectations—continued to decline. The 1-month volatility gauge slipped to 4.4%, the lowest in over a month, suggesting reduced anticipation of sharp currency swings.

The early gains in the rupee were supported by mild dollar sales from foreign banks. However, consistent corporate demand for the greenback capped the local currency’s upside. The tug-of-war between foreign inflows and import-related dollar buying has kept the rupee confined to a tight range recently.

Across Asia, other regional currencies also showed limited movement, while the dollar index remained near the 99 mark without any major directional momentum. The dollar's performance has been weighed down by global concerns, especially the broader impact of wide-ranging US tariffs. So far in 2025, the dollar has weakened over 8.5% against a basket of major currencies.

Despite the announcement of a high-level US-China meeting, the dollar failed to sustain any upward momentum. For the Indian rupee, the absence of fresh global triggers and balanced local flows has kept it stable, with traders watching closely for new signals that could drive it out of its current narrow band.

Unit	Today	Previous
Dollar/Rupee	85.51	85.60
Dollar Index	99.02	99.09
1-year Dollar/rupee premium (%)	1.82%	1.81%

OUTLOOK
Indian equities are expected to show a cautious upward bias, led by continued interest in information technology and oil & gas sectors. Benchmark indices will likely remain resilient, supported by defensives and export-oriented stocks, even as broader markets may underperform. 

Indian government bond yields are likely to remain under upward pressure in the near future. The RBI’s recent 50 basis point repo rate cut and shift to a neutral policy stance will limit expectations of further easing. With the RBI halting daily liquidity injections after record infusions, market participants will increasingly focus on inflation data and global rate trends.

The rupee is expected to continue trading in a narrow range, with no clear directional bias in the immediate term. Two-sided flows—foreign bank dollar sales versus corporate demand—will likely keep the currency stable. Diminishing implied volatility suggests low anticipation of sharp moves. Unless new global triggers surface, the rupee will likely hover around current levels, tracking dollar index movements and regional currency cues.

Key Events & Data Due Thursday:

Economic Data

• UK April Trade data
• UK April Industrial Production  Index
• India May CPI data
• US May Core PPI data
• US weekly jobless claims data

Corporate Actions

• Canara Bank  to consider fund raising
• Kriti Industries (India)  to consider fund raising
• Jan-Mar Earnings: State Trading Corp of India, Vipul

Policy Events

• ECB's De Guindos Speaks
• ECB's Schnabel Speaks
• ECB's Elderson Speaks
• ECB's Schnabel Speaks