Rupee Weakens Past 86 As Global Jitters Drag Markets Lower 

HIGHLIGHTS

• Clarity on expiry dates to come this month: SEBI chief Tuhin Kanta Pandey
• NSE wants weekly expiry on Tuesday, writes to SEBI: Reports 
• Ashok P Hinduja backs IndusInd Bank board, assures promoter support for capital needs
• Emcure Pharma stock rises 8% after net profit grows 64% from last year
• Indoco Remedies shares fall 7% as company reports loss, revenue drops 12%

Indian equities ended lower on Thursday, mirroring weakness in global markets amid renewed concerns over the US tax bill’s impact on fiscal health. The benchmark indices slipped over 0.75%, with risk appetite dampened by fears that the proposed US tax cuts could widen the fiscal deficit significantly, pushing global investors to reassess exposure to risk assets.

Sentiment was further impacted by a spike in US bond yields following tepid demand in a $16 billion auction of 20-year Treasuries. The weak response raised alarms about growing structural stress in government borrowing, reinforcing expectations of a deteriorating fiscal outlook in the US. This global uncertainty spilled over to emerging markets, including India, prompting widespread profit-taking across sectors.

Sectoral Performance
On the sectoral front, FMCG and IT stocks led the decline. ONGC was the top Nifty laggard, falling 3% after reporting a 20% year-on-year drop in net profit. Colgate shares slumped 6% after revenue growth missed estimates. Mankind Pharma also slipped 4%, as both revenue and margins missed expectations. HG Infra bore the brunt of earnings pressure, shedding 7% following a sharp 28% fall in EBITDA and contraction in margins to 17.6% from 19.5% last year.

Top Gainers	% Change	Top Losers	% Change
NIFTY MEDIA	1.11%	NIFTY FMCG	-1.44%
		NIFTY IT	-1.31%
		NIFTY OIL & GAS	-1.17%
		NIFTY CONSUMER DURABLES	-1.14%
		NIFTY AUTO	-1.01%

Indian government bond yields edged higher on Thursday, halting a two-day slide amid caution ahead of the weekly debt auction. The yield on the benchmark 10-year gilts settled at 6.2339%, up from 6.2062% in the previous session.

The uptick came ahead of the government’s scheduled sale of ₹270 billion worth of bonds on Friday. The modest rise in yields follows two sessions of declines, which were largely driven by expectations of further monetary easing and active buying by state-run banks.

Investors remain optimistic about the interest rate outlook, with the Reserve Bank of India’s next monetary policy review due on June 6. A 25-basis-point rate cut is largely priced in, amid a backdrop of easing inflation and abundant banking system liquidity. The soft inflation trajectory, which has remained below the central bank’s 4% target for three consecutive months, continues to support bullish sentiment in the bond market.

Market participants are also awaiting the RBI’s dividend transfer to the government for the previous financial year, which is expected to be significantly higher than last year’s ₹2.1 trillion payout. Economists anticipate the surplus to exceed ₹3.5 trillion, providing additional fiscal headroom and reinforcing expectations of dovish policy action.

Tenure	Today	Previous
10-year Gilt	6.23%	6.21%
5-year gilt	5.88%	5.85%
5-year OIS	5.67%	5.63%

The Indian rupee weakened to its lowest level in over a month on Thursday, dragged down, by likely equity-related outflows and a breach of key technical levels that triggered stop-loss selling. 

The currency closed at 86.0025 against the US dollar, marking a 0.4% decline on the day. During intraday trade, the rupee touched 86.1025—its lowest since April 11—after falling past the critical 85.80 support level.

Currency traders cited persistent dollar demand from foreign and large public sector banks, likely acting on behalf of corporate or custodial clients. This sustained pressure, combined with broad-based dollar strength, pulled the rupee lower despite relatively stable regional currency movements earlier in the day.

The dollar index also edged higher in the afternoon session, further denting sentiment across Asian currencies. While many emerging market peers managed to hold ground, the rupee continued to underperform.

So far in May, the rupee has depreciated nearly 1.5%, making it one of the weakest performing currencies in the region. Despite a global environment of dollar softness driven by concerns over US fiscal stability and policy outlook, domestic dollar demand remains elevated. Traders attribute this to seasonal corporate outflows, portfolio-related dollar buying, and increased hedging activity.

Unit	Today	Previous
Dollar/Rupee	86.00	85.64
Dollar Index	99.64	99.44
1-year Dollar/rupee premium (%)	2.06%	2.08%

OUTLOOK
Indian equities may remain volatile as sentiment remains fragile due to weak global cues and persistent foreign fund outflows. Concerns about the proposed US tax bill and its potential impact on the global fiscal landscape and rising bond yields abroad could continue to weigh on risk assets. On the domestic front, mixed corporate earnings and sector-specific disappointments—particularly in FMCG and pharma—may keep large-caps subdued, while midcaps could witness selective buying. 

The rupee is expected to remain weak after breaching a key technical support and closing at a more than one-month low. Continued dollar demand from foreign banks and corporate clients may keep pressure on the currency, even as the dollar index remains subdued. 

Key Events & Data Due Friday:

Economic Data

• Germany Jan-Mar GDP data
• India weekly forex reserve data
• US April new home sales data

Corporate Actions

• Jan-Mar earnings: 20 Microns, Afcons Infrastructure, Agarwal Industrial Corporation, AIA Engineering, Ashok Leyland, Ashoka Buildcon, Balkrishna Industries, BEML, Camlin Fine Sciences, Everest Kanto Cylinder, Finolex Industries, Glenmark Pharmaceuticals, Gujarat Narmada Valley Fertilizers and Chemicals, Harrisons  Malayalam, HCL Infosystems, JSW Steel, Linde India, Narayana Hrudayalaya, Precot, Ramco Industries, Reliance Infrastructure, Timken India, Uttam Sugar Mills, VIP Clothing, West Coast Paper Mills. 
• Ashok Leyland to consider bonus share issue

Policy Events

• RBI Board meeting
• ECB's Lane speaks
• ECB's Schnabel speaks