Equity Ends Lower; Rupee Hits 1-Month High On US Trade Deal Hopes

HIGHLIGHTS

• India-US interim trade deal could be signed within the next two days
• UCO Bank's total business surged 14% to ₹5.24 trillion
• MobiKwik shares gain as arm secures SEBI nod to operate as stockbroker
• Motilal Oswal shares gain 4% after AUM cross ₹1.5 trillion
• Nykaa shares drop 4% after equity worth ₹12.10 trliion changes hands in block deals
• Maharashtra approves ₹1.35 trillion investment proposals in key sectors, high-tech industries

Indian equities ended lower on Thursday in a volatile session, reversing early gains as financial stocks came under selling pressure. The Nifty 50 settled at 25,405.30, down 48 points or 0.19%, while the Sensex declined 170 points to close at 83,239.47.

Markets opened firm on positive global cues, particularly after a trade agreement between the US and Vietnam. The Nifty briefly approached the 25,600 level in the first half, but profit booking in the final hour erased intraday gains, dragging indices to the day’s low.

Financial stocks led the decline, with Kotak Mahindra Bank, Bajaj Finance, and Bajaj Finserv weighing heavily on sentiment. The broader market remained rangebound, with the BSE Midcap index falling for a third straight session. The Smallcap index, however, ended 0.5% higher, breaking its two-day losing streak.

Sectoral Performance
Sector-wise, metal, realty, PSU bank, and telecom indices slipped around 0.5% each. Meanwhile, pharma, oil & gas, media, auto, and consumer durables indices managed gains of 0.3% to 1%, providing some offset.

Notable gainers on the Nifty included Apollo Hospitals, Hero MotoCorp, Dr Reddy’s Labs, ONGC, and Maruti Suzuki. On the losing side were SBI Life, Kotak Mahindra Bank, JSW Steel, and Bajaj twins.

Overall, sentiment appeared cautious ahead of the key US jobs data due Friday, which could shape expectations for upcoming Federal Reserve rate decisions and influence global markets heading into the next week.

Top Gainers	% Change	Top Losers	% Change
NIFTY MEDIA	1.45%	NIFTY PSU BANK	-0.89%
NIFTY CONSUMER DURABLES	0.56%	NIFTY METAL	-0.78%
NIFTY HEALTHCARE INDEX	0.52%	NIFTY REALTY	-0.71%
NIFTY AUTO	0.44%	NIFTY FINANCIAL SERVICES	-0.47%
NIFTY PHARMA	0.42%	NIFTY PRIVATE BANK	-0.46%

Indian government bond yields ended little changed on Thursday, as traders remained cautious ahead of key liquidity and macroeconomic events. The benchmark 10-year bond yield settled at 6.2875%, nearly flat from the previous session’s 6.2892%. The five-year 6.75% 2029 bond closed at 5.9587%, slightly up from 5.9522% on Wednesday.

Market participants refrained from taking aggressive positions ahead of the Reserve Bank of India’s follow-up action on liquidity. A seven-day variable rate reverse repo worth ₹850 billion is set to mature on Friday. With banking system liquidity remaining in surplus and short-term rates still below the repo rate, traders are closely watching whether the RBI intensifies its withdrawal efforts.

Sentiment was also influenced by anticipation around the US June jobs data due Friday. A softer-than-expected ADP private payrolls report has increased the odds of a US Federal Reserve rate cut. Markets now assign a 25% probability of a rate cut in July and fully price in a cut by September, according to the CME FedWatch tool.

Meanwhile, the government will auction ₹320 billion of longer-duration bonds on Friday. After the subdued response to last week’s benchmark paper, investors will assess whether demand holds up amid uncertainty around liquidity and global interest rate trends.

Traders are expected to stay on the sidelines until clarity emerges from both the RBI’s liquidity stance and US economic signals, making Friday a potentially pivotal day for bond market direction.

Tenure	Today	Previous
10-year Gilt	6.29%	6.29%
5-year gilt	5.96%	5.95%
5-year OIS	5.65%	5.67%

The Indian rupee strengthened on Thursday, closing at its highest level in a month, supported by foreign bank dollar sales and short-covering in the currency market. The rupee settled at 85.31 per US dollar, up 0.4% on the day, after touching an intraday peak of 85.20, its strongest since late May.

The rally gained traction in the latter half of the session as dollar sales by foreign banks pushed the rupee higher. The move above the 85.40 mark triggered stop-losses on short rupee positions, amplifying gains. Optimism surrounding a possible US-India trade deal also improved market sentiment toward the currency.

While most Asian currencies posted modest gains, the dollar index held steady ahead of the closely watched US non-farm payrolls report. Regional equities were mostly higher following positive signals from US-Vietnam trade talks, which traders viewed as potentially opening the door for broader tariff agreements, including with India. However, Indian benchmark indices closed marginally lower.

US and Indian trade negotiators are working toward a tariff-reducing deal before the July 9 deadline set by President Donald Trump, according to sources familiar with the talks. Market participants believe a successful trade agreement could drive the rupee below 85. However, further appreciation will hinge on sustained foreign inflows and whether the Reserve Bank of India resumes dollar buying to rebuild reserves.

Traders will now shift focus to the upcoming US jobs data for cues on Federal Reserve policy direction. Analysts expect 110,000 jobs to have been added in June, with the unemployment rate likely rising to 4.3%.

Unit	Today	Previous
Dollar/Rupee	85.31	85.70
Dollar Index	96.82	97.03
1-year Dollar/rupee premium (%)	2.08%	1.99%

OUTLOOK
Indian equities may find continued support from the recent rally in large-cap financials and energy names. However, further gains could face intermittent resistance due to profit-booking and a cautious global mood. The Nifty 50 is likely to fluctuate within the 25,400–25,600 range as investors assess progress on the US-India trade deal and await the US non-farm payrolls data, which could shape global risk appetite.

Participation in the broader market may remain selective, with volatility expected in midcap and smallcap segments following recent sharp gains. Sector-specific moves are likely, particularly in auto, metals, and pharma, while profit-taking may emerge in overbought PSU banks and consumer-focused stocks.

In the bond market, government securities are expected to trade in a narrow range as traders await cues on the Reserve Bank of India’s liquidity stance. With the ₹850 billion VRRR maturing on Friday, any follow-up action by the RBI will be closely watched. The benchmark 10-year bond yield is expected to remain between 6.25% and 6.30%, with demand at Friday’s debt auction likely to influence short-term direction.

For the rupee, near-term movement will depend on dollar trends and US macro data. A softer-than-expected US payrolls report may revive rate cut bets and push the rupee closer to the 85.00 mark. However, dollar buying by the RBI or importer demand could limit appreciation. A confirmed US-India trade agreement may boost sentiment, especially if accompanied by foreign inflows. The rupee is expected to trade in a 85.00–85.60 range in the near term.

Key Events & Data Due Friday:
Economic Data

• German May Factory Orders Data
• India weekly FX Reserves Data

Corporate Actions

• VRL Logistics to consider bonus share issue
• MIC Electronics to consider financial results
• Vintage Coffee And Beverages to consider fund raising

Policy Events

• ECB President Lagarde Speaks  
• ECB's Elderson Speaks  
• BoE Governor Bailey Speaks