Nifty Holds 25,000, Bonds And Rupee Surge As Oil Slides On Israel-Iran Truce

HIGHLIGHTS

- Vodafone Idea surges 6% amid reports of Centre considering relief on ₹840 billion dues
- ONGC, Oil India, other oil refinery stocks tumble as crude oil prices drop
- IndiGo, SpiceJet shares jump up to 4% as oil prices slump following Iran-Israel ceasefire
- India to roll out ₹10 billion scheme to boost rare earth magnet manufacturing
- Bondada Engineering shares hit 5% upper circuit after bagging an ₹8.36 billion order

Indian equity benchmarks closed higher on Tuesday, though gains were trimmed significantly by the session’s end amid geopolitical uncertainties surrounding the Israel-Iran ceasefire. The Nifty 50 broke out of a month-long consolidation, and briefly rose above 25,300 in early trade but settled at 25,044, up 72 points.

Markets opened with optimism following the announcement of a temporary truce in West Asia, but risk appetite faded as reports of ceasefire violations surfaced. Despite the caution, underlying domestic sentiment remained constructive, helped by falling crude oil prices and selective buying in key sectors.

Sectoral Performance
Oil marketing companies gained as Brent crude prices plunged below $70 per barrel, while upstream producers lagged. Crude-sensitive sectors such as IndiGo and Asian Paints rallied, benefitting from easing input costs. In telecom, Vodafone Idea surged 5% after ministerial comments supporting market competition lifted investor hopes.

Defence stocks, which had recently rallied, witnessed profit-booking. Garden Reach Shipbuilders and Hindustan Aeronautics declined sharply, shedding 9% and 3%, respectively. IT firm KPIT Technologies fell 6% after management flagged delays in converting deals into revenue.

Within financials, SBI Cards rose 3% on strong credit card spending data, while Astec Lifesciences jumped 13% after announcing a ₹2.5 billion rights issue. Bondada Engineering advanced 5% after securing an ₹8.36 billion infrastructure order from the Tamil Nadu government.

Top Gainers	% Change	Top Losers	% Change
NIFTY PSU BANK	1.46%	NIFTY MEDIA	-1.12%
NIFTY METAL	1.01%	NIFTY OIL & GAS	-0.17%
NIFTY FINANCIAL SERVICES	0.73%
NIFTY PRIVATE BANK	0.73%
NIFTY BANK	0.72%

Indian government bonds rallied on Tuesday as news of a ceasefire between Israel and Iran and a sharp drop in global crude oil prices boosted sentiment and triggered short-covering by traders. The benchmark 10-year bond yield dropped over 5 basis points to close at 6.2504%, marking its sharpest fall since May 13. The yield on the five-year 6.75% 2029 bond also eased, settling at 5.9870%, down from 6.0304% in the previous session.

The ceasefire announcement by US President Donald Trump was confirmed by both sides, offering temporary relief to global markets, though later reports of ceasefire violations introduced some uncertainty. Nonetheless, investors responded positively to the potential end of the 12-day conflict, which had been fuelling oil price volatility.

Brent crude fell nearly 2.7% to $69.52 per barrel during Asian trade, following a steep 7% drop on Monday. The decline in oil prices helped ease inflationary concerns for India, which imports the bulk of its crude requirements.

With tensions easing, bond yields are likely to remain rangebound in the near term, with the new 10-year benchmark yield likely hovering between 6.20% and 6.30%. Traders will keep an eye on further global developments and domestic cues.

Meanwhile, India’s banking system liquidity surplus narrowed to a three-week low, coming in at ₹2.44 trillion on Monday, primarily due to tax-related outflows.

Tenure	Today	Previous
10-year Gilt	6.25%	6.31%
5-year gilt	5.99%	6.03%
5-year OIS	5.69%	5.76%

The Indian rupee registered its strongest single-day performance in a month on Tuesday, buoyed by a sharp drop in global crude oil prices, a softer US dollar, and renewed strength in Asian currencies. The rupee closed at 85.9750 against the US dollar, appreciating 0.9%—its biggest single-day gain since May 23.

Brent crude futures tumbled to $69 per barrel, retreating over 15% from Monday’s five-month high, easing pressure on oil-import-dependent economies like India. The fall in oil prices provided relief to the rupee, which has been weighed down in recent weeks by geopolitical tensions and high energy costs.

Traders attributed the rupee’s rally to broad-based dollar sales by banks and unwinding of short positions in the local currency. Strength in regional currencies also buoyed sentiment, with Asian peers rising between 0.1% and 1.7%.

Indian equity markets closed higher, but trimmed gains after reports of a possible ceasefire violation by Iran—claims Tehran denied. 

The dollar index edged lower to 98, amid growing expectations of a rate cut by the US Federal Reserve. Comments by Fed Vice-Chair Michelle Bowman hinted at a possible rate cut as early as July, further weakening the greenback.

Looking ahead, remarks from Fed Chair Jerome Powell, due later in the day and on Wednesday, will be closely watched. The rupee is likely to remain supported if oil prices stay subdued and global risk sentiment holds firm.

Unit	Today	Previous
Dollar/Rupee	85.98	86.75
Dollar Index	97.62	98.01
1-year Dollar/rupee premium (%)	1.89%	1.93%

OUTLOOK
Indian financial markets are likely to open on a cautious footing on Wednesday, as optimism over the Israel-Iran ceasefire may be tempered by concerns about its fragility and potential for renewed conflict. Equities may trade in a narrow range after Tuesday’s intraday reversal from recent highs. While cooling crude oil prices may support oil-sensitive sectors like paints, aviation, and downstream energy, traders may remain hesitant amid mixed geopolitical signals. 

Bond markets may witness mild consolidation after Tuesday’s sharp rally, as the benchmark 10-year yield hovers in the 6.25–6.30% range. Easing oil prices and dovish central bank expectations will offer support, but the uncertain geopolitical backdrop could limit fresh buying. 

The rupee may face mild pressure after Tuesday’s strong recovery, with dollar/rupee expected to trade between 85.90–86.30. While softening crude and dollar weakness favour the rupee, risks persist from potential renewed hostilities in West Asia and uncertainty over US policy direction. FPI inflows from upcoming IPOs may offer some cushion, but a cautious undertone is likely to dominate as markets assess whether the ceasefire holds. 

Key Events & Data Due Wednesday:
Economic Data

• US May New Home Sales data
• US Weekly Crude Oil Inventories data

Corporate Actions

• Bluspring Enterprises to consider financial results
• Can Fin Homes to consider fund-raising
• CEAT to consider fund-raising
• Exicom Tele-Systems to consider fund-raising
• Ind-Swift to consider financial results
• Signatureglobal (India) to consider fund-raising
• Valiant Organics to consider fund-raising

Policy Events

• US Fed Chair Powell testimony before Congress 
• German Buba Mauderer speaks