Nifty Holds Above 25,400; Rupee Steady As US Trade Talks Await Clarity

HIGHLIGHTS

• Capital market shares Nuvama Wealth, Angel One, CDSL fall up to 10%
• Bank of Maharashtra shares gain after 15% advances growth, deposits rise 14%
• IRB InvIT to acquire road SPVs for ₹8,436 crore
• Paras Defence shares jump 10% after adjusting for 1:2 stock split
• Trent shares end 11% lower after growth slows, Nuvama downgrades

Indian equity markets ended higher on Friday, rebounding in the final hour of trade after a choppy session. The Nifty 50 closed above the 25,400 mark, supported by gains in IT majors and ICICI Bank, which helped lift sentiment despite weakness in early trade.

The broader market showed mixed performance. The Nifty Midcap 100 dipped marginally by 6 points to 59,678, while market breadth improved towards the close, buoyed by strength in select pockets such as information technology, pharmaceuticals, and private sector financials.

Sectoral Performance
IT stocks led the recovery, tracking gains in global tech shares. Oil & gas, realty, and pharma sectors also witnessed selective buying. Bajaj Finance was the top gainer on the Nifty after reporting a strong quarterly business update, signalling robust traction in its lending portfolio.

However, not all segments participated in the upmove. Trent plunged over 11%, marking its sharpest single-day drop in three months, after it reported a weaker-than-expected update for the first quarter.

Capital market-related stocks came under pressure after SEBI barred four Jane Street entities from accessing Indian markets, alleging manipulation in the Nifty 50 index. Shares of BSE Ltd. dropped 6%, while Angel One also declined, weighed down by concerns over reduced market share for June alongside regulatory overhang.

Top Gainers	% Change	Top Losers	% Change
NIFTY OIL & GAS	1.05%	NIFTY METAL	-0.45%
NIFTY REALTY	0.91%	NIFTY AUTO	-0.10%
NIFTY PHARMA	0.81%
NIFTY IT	0.80%
NIFTY MEDIA	0.66%

Indian government bond yields inched up on Friday, mirroring the upward move in US Treasury yields and amid pressure from additional long-duration domestic supply. The benchmark 10-year bond yield closed at 6.2947%, slightly higher than the previous session’s 6.2875%. Meanwhile, the yield on the five-year 6.75% 2029 bond eased marginally to 5.9547% from 5.9587%.

The upward movement in US yields came after stronger-than-expected June payrolls data, which cast doubt on a near-term rate cut by the Federal Reserve. The US 10-year yield climbed to 4.34%, nearly 15 basis points above the week’s low, pushing global bond yields higher in response.

On the domestic front, the government’s weekly debt auction added supply-side pressure. New Delhi sold ₹160 billion each of 15-year and 40-year bonds, increasing the long-duration stock in the market.

Meanwhile, the Reserve Bank of India absorbed ₹1 trillion in a seven-day variable rate reverse repo auction, reflecting the banking system’s persistent surplus liquidity. The overwhelming demand at the VRRR helped maintain overnight interbank rates within the policy corridor, aiding effective policy transmission.

Despite the modest uptick in yields, traders expect short-to-medium-term bonds to stay supported, given the sustained liquidity surplus. The yield spread between five-year and 10-year bonds has widened to nearly 35 basis points, suggesting stronger demand for shorter-duration papers.

Investors will continue to monitor global yield cues and RBI’s liquidity stance for further direction in the bond market.

Tenure	Today	Previous
10-year Gilt	6.29%	6.29%
5-year gilt	5.95%	5.96%
5-year OIS	5.68%	5.65%

The Indian rupee ended largely flat on Friday, capping the week with minimal change as traders adopted a cautious stance ahead of potential developments in US-India trade talks. The rupee closed at 85.3925 per US dollar, down 0.1% both on the day and for the week.

The local currency had touched a one-month high of 85.25 in the previous session, buoyed by dollar weakness and positive sentiment around a potential trade agreement. However, Friday’s session saw the rupee give up some gains, weighed by routine month-end dollar demand from importers and reduced expectations of an early US rate cut following stronger-than-expected labour market data.

The US non-farm payrolls report showed continued strength in job additions, prompting investors to scale back their bets on near-term Federal Reserve easing, thereby supporting the dollar and limiting rupee gains.

Traders also cited reluctance to build aggressive long positions in the rupee ahead of the weekend due to the risk of policy headlines. Market participants noted that the rupee has repeatedly faced resistance around the 85.35–85.40 zone, failing to sustain gains beyond that range.

However, optimism lingers that a formal US-India trade deal could provide fresh momentum to the rupee, helping it decisively break past this resistance. President Donald Trump announced the start of tariff notifications to countries on Friday and hinted at further agreements following the deal with Vietnam earlier in the week.

Unit	Today	Previous
Dollar/Rupee	85.39	85.31
Dollar Index	96.58	96.82
1-year Dollar/rupee premium (%)	2.02%	2.01%

OUTLOOK
Indian markets are likely to begin the upcoming week on a cautious note, with equity benchmarks expected to consolidate following recent gains. The Nifty 50 may continue to oscillate within the 25,300–25,600 range, as investors monitor developments around the anticipated US-India trade deal and interpret signals from the latest US labour market data. Strength in IT, auto, and select financials could provide underlying support, while any resurgence of profit-taking, especially in consumer-facing and capital market stocks, may cap broader gains. 

In the bond market, yields may see a mild upward bias early in the week after Friday’s auction of long-duration papers exerted slight pressure. The benchmark 10-year yield is expected to trade within a narrow range of 6.27% to 6.32%, with direction driven by the Reserve Bank of India’s liquidity stance. The central bank’s VRRR withdrawal of ₹1 trillion last week may keep overnight rates firm. However, the ample liquidity surplus, coupled with sustained foreign interest in government securities, is likely to provide some cushion. Traders will watch for follow-up liquidity measures and the demand trend in upcoming weekly auctions.

For the rupee, near-term direction will hinge on global dollar movement and clarity on trade policy from Washington. A confirmed US-India trade agreement could boost sentiment and potentially help the rupee breach the 85.25–85.35 resistance zone. However, any signs of RBI dollar buying or renewed importer demand may restrict further appreciation. With Fed rate cut expectations repricing post-strong US jobs data, traders may stay guarded. The rupee is likely to trade in a band of 85.20 to 85.60 in the coming days, awaiting cues from macro and policy developments.

Key Events & Data Due Monday:
Economic Data

• UK June Halifax House Price Index 
• German May Industrial Production Index

Corporate Actions

• Earnings: Arihant Capital Markets, DPSC, Siemens Energy India, Take Solutions

Policy Events

• German Buba President Nagel Speaks  
• Eurogroup Meetings