Nifty Slips Below 25,000; Rupee Weakens Amid Geopolitical Tensions

HIGHLIGHTS

• BSE, IndiGo likely to enter Nifty50 in upcoming review 
• Ola Electric decline as equity worth ₹1.07 billion changes hands in block deals
• Bharat Forge shares rise as DRDO-backed Carbine wins Indian Army bid
• NBCC gain 3% after ₹2.96 billlion order win from Meerut Development Authority
• Solar Industries wins contract worth ₹1.58 billion from Ministry of Defence

Indian equities ended lower on Monday, with the benchmark Nifty 50 slipping below the 25,000 level as weakness in IT, auto, and FMCG stocks outweighed gains in broader indices. Despite opening higher, the index lost steam during the session, closing in negative territory amid selling in key large-cap sectors.

In contrast, the broader market maintained its relative strength for a second consecutive day. The Nifty Midcap 100 index advanced 211 points to 58,207, supported by solid buying in defence, real estate, and industrial stocks. Broader indices outperformed the frontline index, posting gains of 0.3% to 0.7% even as the headline gauge weakened.

Sectoral Performance
Oil marketing companies and paint stocks were among the day’s top gainers, buoyed by little impact of West Asia conflict on crude oil prices. Brent crude futures fell below $77 per barrel, easing concerns around input costs and margins. Indian Oil Corp, BPCL, and Asian Paints closed with notable gains.

However, IT stocks dragged overall sentiment lower. The sector remained under pressure after Accenture’s weaker-than-expected results cast a shadow over global tech peers. TCS, Infosys, and Tech Mahindra were among the major losers in the pack.

Defence stocks extended recent gains amid heightened geopolitical tensions in West Asia and fresh domestic order wins. The sector benefited from safe-haven buying and positive sector-specific developments.

Top Gainers	% Change	Top Losers	% Change
NIFTY MEDIA	4.39%	NIFTY IT	-1.48%
NIFTY CONSUMER DURABLES	0.82%	NIFTY AUTO	-0.92%
NIFTY METAL	0.66%	NIFTY FMCG	-0.74%
NIFTY OIL & GAS	0.10%	NIFTY FINANCIAL SERVICES	-0.35%
NIFTY PHARMA	0.06%	NIFTY BANK	-0.34%

Indian government bond yields ended largely flat on Monday, recovering from early-session losses as global crude oil prices retreated from intraday highs. The benchmark 10-year bond yield closed at 6.3053%, marginally down from its previous close of 6.3087%, while the most traded 6.79% 2034 bond settled at 6.3767%, versus 6.3795% on Friday.

Bond prices opened weaker after Brent crude oil futures surged to a five-month high of $81.40 per barrel in early Asian trade, driven by concerns over the US strike on Iran’s nuclear facilities. However, prices later cooled to around $77 per barrel, easing pressure on inflation expectations and providing support to sovereign debt.

India, being heavily reliant on crude imports, remains sensitive to oil price fluctuations. Elevated prices can push up inflation and limit the scope for further monetary easing by the Reserve Bank of India.

Market sentiment remained cautious amid geopolitical uncertainties. Traders stayed on the sidelines ahead of further developments in the West Asia conflict, with Iran warning that US involvement had broadened its list of military targets.

The bond market is expected to remain volatile in the near term, driven by external risks.

Earlier this month, the RBI cut the repo rate by 50 basis points and revised its inflation forecast to 3.7% for the current fiscal year, aiming to support growth and improve liquidity. The neutral policy stance continues to limit expectations of additional rate cuts.

Tenure	Today	Previous
10-year Gilt	6.31%	6.31%
5-year gilt	6.03%	6.02%
5-year OIS	5.76%	5.75%

The Indian rupee ended weaker on Monday, tracking losses across most Asian currencies as rising geopolitical tensions in the West Asia prompted investors to flock to safe-haven assets like the U.S. dollar. The rupee settled at 86.75 per dollar, depreciating 0.2% from Friday’s close of 86.5850.

Earlier in the session, the rupee had slipped to 86.86 amid elevated oil prices, but a late retreat in Brent crude offered limited support. Brent futures, which had surged to a five-month high of $81.40 per barrel, cooled off to $77.4 by close, helping cushion the rupee’s losses.

The escalation followed US strikes on Iran’s nuclear sites, raising concerns over potential retaliation. Markets are now wary of the possibility that Iran may disrupt shipping through the Strait of Hormuz, a critical route for global crude supplies.

The dollar index rose nearly 0.4% to a two-week high near 99.4, while most Asian peers weakened 0.2%–1.4%. Despite the broader risk aversion, the rupee found some temporary relief from inflows linked to anchor investor activity ahead of HDB Financial’s IPO launch, which could attract significant foreign participation in the coming sessions.

Importers took advantage of brief intraday appreciation to hedge near-term dollar obligations, but strong oil-related demand capped gains. The Reserve Bank of India was seen selling dollars near 86.90, helping contain further depreciation.

Unit	Today	Previous
Dollar/Rupee	86.75	86.59
Dollar Index	99.30	98.25
1-year Dollar/rupee premium (%)	1.93%	1.88%

OUTLOOK
Indian equity markets are expected to trade with a cautious tone in the coming sessions, after failing to hold above the psychologically important 25,000 mark. While broader indices have shown some resilience, sustained foreign institutional selling, weakness in IT and auto stocks, and global risk aversion could weigh on sentiment. Investors will closely track oil price movements, geopolitical developments, and upcoming corporate earnings for cues. Select pockets like defence and energy-linked stocks may continue to attract interest due to their relative immunity to global headwinds.

In the bond market, government securities will likely remain rangebound, with traders awaiting further clarity on the trajectory of oil prices and any potential policy signals from the Reserve Bank of India. Elevated crude prices may limit hopes of additional easing, though recent dovish commentary by the RBI governor could offer some reassurance. The upcoming auction supply and minutes of the latest Monetary Policy Committee meeting will also shape sentiment. Benchmark 10-year yields are expected to hover in the 6.27%–6.32% range.

The Indian rupee is likely to trade under pressure in the near term, with 87 acting as a key psychological level. While inflows from the HDB Financial IPO may offer temporary support, persistent dollar demand from oil companies and exporters holding back sales could cap any gains. Movement in crude oil and the dollar index will continue to dominate rupee direction, with volatility expected to remain elevated.

Key Events & Data Due Tuesday:
Economic Data

• German Ifo June Business Climate Index 
• US March quarter current account balance data

Corporate Actions

• Astec LifeSciences to consider fund raising
• Mangal Credit and Fincorp to consider fund raising
• Scoda Tubes to financial results

Policy Events

• Fed Chair Powell testimony before Joint Economic Committee
• BoE Gov Bailey speaks
• ECB President Lagarde speaks