Nifty Ends Lower On IT Drag; Rupee Gains Despite Global Trade Concerns

HIGHLIGHTS

• TCS constant currency revenue drops 3.3%; deal wins at $9.4 billion
• AMC stocks rise up to 6% on June AMFI data
• Vedanta extend losses after short-seller's report; group's base metal CEO quits
• Petronet LNG signs ₹12 billion regasification deal with Deepak Fertilisers arm
• ACME Solar shares rise 8% on Elara Capital's bullish call
• Anand Rathi Wealth Q1 results: Net profit up 28% on-year, EBITDA jumps 30%

Indian equity benchmarks ended lower on Thursday, with the Nifty 50 giving up early gains due to selling pressure in information technology and insurance stocks. The index settled below the 25,400 mark, with losses spread across most sectors. Nearly 40 of the 50 Nifty components ended in the red, indicating broad-based weakness amid subdued investor participation.

Bharti Airtel was the top loser on the index, while IndusInd Bank and Maruti Suzuki were notable gainers, each rising over 1.5%. Insurance stocks dragged the market down, with HDFC Life falling after reporting weak June business figures. LIC slipped 2% amid sectoral concerns and speculation of a potential government stake sale via an offer-for-sale. In contrast, Max Financial Services advanced following a positive business update.

Sectoral Performance
IT stocks remained under pressure due to profit booking ahead of TCS’s earnings announcement, weighing heavily on the index. FMCG and pharma counters also contributed to the downside. However, metal and realty sectors bucked the trend and posted gains, offering some support.

Broader markets also mirrored the weak sentiment, with midcap and smallcap indices ending modestly lower. Thin trading volumes and lack of fresh triggers kept investor participation muted.

Top Gainers	% Change	Top Losers	% Change
NIFTY REALTY	0.72%	NIFTY PSU BANK	-0.80%
NIFTY METAL	0.42%	NIFTY IT	-0.79%
NIFTY CONSUMER DURABLES	0.11%	NIFTY PHARMA	-0.59%
		NIFTY FMCG	-0.57%
		NIFTY HEALTHCARE INDEX	-0.56%

Indian government bonds ended largely steady on Thursday, as traders remained cautious ahead of Friday’s fresh debt auction and awaited further signals from the Reserve Bank of India on liquidity management. The yield on the benchmark 10-year bond settled at 6.3156%, nearly flat compared to Wednesday’s close of 6.3136%.

The broader bond market held within a narrow range, with the 10-year yield hovering between 6.28% and 6.32% since the start of July. Traders expect this trend to persist in the absence of major domestic triggers, especially as liquidity dynamics evolve.

Investor focus remained fixed on the RBI’s liquidity operations. The central bank conducted a two-day variable rate reverse repo auction on Wednesday, removing 973 billion rupees from the system. This marked the second such liquidity absorption in four sessions and pushed overnight rates above the floor of the monetary policy corridor.

The newly launched Secured Overnight Rupee Ratehas also stayed above the Standing Deposit Facility rate for a second consecutive day, reinforcing signals of tightening liquidity conditions.

Meanwhile, the government plans to raise 250 billion rupees via a bond auction on Friday, including a new seven-year security. The paper was seen trading around 6.25% in the 'when-issued' market, with traders keenly watching investor appetite for the new issuance.

Market participants are also monitoring geopolitical cues, particularly the outcome of the expected US-India trade deal. Any announcement from President Donald Trump—who has stated a deal is “close”—could influence near-term sentiment and foreign investor flows.

Tenure	Today	Previous
10-year Gilt	6.32%	6.31%
5-year gilt	5.96%	5.97%
5-year OIS	5.69%	5.70%

The Indian rupee strengthened for the third consecutive session on Thursday, tracking gains in other Asian currencies despite continued tariff threats from US President Donald Trump. The rupee ended at 85.64 per dollar, up 3 paise from the previous close, according to Bloomberg.

So far this financial year, the rupee has depreciated by 0.15%, and by just 0.03% in the 2024 calendar year, reflecting relatively stable performance despite persistent global uncertainties.

The day’s gains came amid broader regional strength. Most Asian currencies rose even as the US continued to expand its tariff actions. On Wednesday, the US levied a 50% duty on Brazilian goods, a 30% tariff on Algeria, Libya, and Iraq, and a 25% tariff on Sri Lanka. Trump also reiterated that copper imports would face a 50% tariff starting August 1.

Meanwhile, the minutes of the latest US Federal Reserve meeting signalled that rising inflation from tariffs may not deter the central bank from pursuing rate cuts. This weighed on the US dollar, with the dollar index easing 0.17% to 97.41.

Unit	Today	Previous
Dollar/Rupee	85.64	85.67
Dollar Index	97.42	97.57
1-year Dollar/rupee premium (%)	1.95%	1.97%

OUTLOOK
Indian equities are likely to stay rangebound in the coming sessions as investors weigh global cues, sector-specific news, and earnings momentum. The Nifty 50 may find support near the 25,300 level while facing resistance around 25,550, especially as IT earnings kick off with TCS results and as insurance stocks remain under pressure. Broader markets could underperform given persistent profit booking in midcap and FMCG names, although stock-specific action in autos and metals may offer some cushion. Market participants will also track commentary from US policymakers and trade-related developments for directional clarity.

In the bond market, government securities are expected to trade in a narrow range as traders await fresh supply from the weekly auction and further liquidity signals from the Reserve Bank of India. The 10-year benchmark yield may fluctuate between 6.28% and 6.33%, with RBI's continued liquidity absorption operations keeping overnight rates elevated. The launch of a new 7-year note in the upcoming auction may attract interest, but overall appetite could be tested depending on the cut-off levels. 

For the rupee, movement will largely hinge on global risk appetite and any progress on the anticipated US-India trade agreement. With the rupee finding resistance near 85.30 and support around 85.85, rangebound trade is likely in the near term. However, a favorable announcement on the trade front or dovish signals from the Federal Reserve may help the rupee appreciate modestly. Dollar demand from importers and central bank activity will continue to shape intraday direction. Overall, stability in equities and global cues will be key to short-term trends in the currency market.

Key Events & Data Due Friday:
Economic Data

• UK May GDP Data
• UK May Industrial Production Data
• UK May Trade Data
• US IEA Monthly Report  
• US Baker Hughes Oil Rig Count

Corporate Actions

• Earnings: Aditya Birla Money, Avenue Supermarts, Elecon Engineering Co, Madhya Bharat Agro Products, Nath Bio-Genes (India), Sanginita Chemicals, and Superhouse
• Mahindra Logistics to consider fund raising
• Religare Enterprises to consider fund raising

Policy Events

• FOMC Member Daly Speaks