S&P Upgrade Lifts Bonds, Rupee Stays Under Pressure Before Trump-Putin Meet

HIGHLIGHTS

• Govt’s Fiscal Discipline Pays Off as S&P Upgrades India’s Rating
• Muthoot Finance keeps FY26 guidance intact, sees potential for higher growth
• India steps up US trade talks amid geopolitical tensions, eyes Oct FTA with EFTA Bloc
• India’s rubber industry seeks incentives, FTAs to offset impact of 50% US tariffs
• Hindustan Copper net profit rises 18% from last year, margin expands to 41%

Indian equities ended a six-week losing streak on Friday, supported by strong buying in pharmaceuticals, information technology, and select financial stocks, though midcaps underperformed. The Nifty posted broad-based gains, with nearly 40 constituents advancing for the week.

Sectoral Performance
Pharma stocks led the rally, with Apollo Hospitals, Eternal Heart Care, and Cipla among the top gainers, reflecting improved sentiment toward the sector. Financials provided key support, with HDFC Life Insurance extending recent momentum, rising 2% on sustained positive outlook.

IT counters also contributed, as Wipro and Infosys each gained 2% after announcing fresh order wins, boosting confidence in near-term earnings prospects.

In stock-specific action, Muthoot Finance surged 10% to an all-time high following robust first-quarter results, sparking a 4% rise in Manappuram Finance on optimism for gold-loan financiers. Info Edge climbed 4%, mirroring gains in Eternal, while Ashok Leyland rose 2% after reporting strong quarterly performance.

Barring FMCG, all sectoral indices closed higher for the week, underscoring improved market breadth. Analysts noted that the rebound was aided by sector rotation and value buying after a prolonged correction, though broader market caution persisted due to global uncertainties and foreign investor positioning.

Top Gainers	% Change	Top Losers	% Change
NIFTY CONSUMER DURABLES	0.75%	NIFTY METAL	-1.39%
NIFTY IT	0.40%	NIFTY OIL & GAS	-0.91%
NIFTY FINANCIAL SERVICES	0.36%	NIFTY REALTY	-0.76%
NIFTY BANK	0.29%	NIFTY FMCG	-0.64%
NIFTY PSU BANK	0.12%	NIFTY MEDIA	-0.53%

 Indian government bond yields registered their sharpest single-day fall in three months on Thursday after S&P Global Ratings upgraded India’s long-term sovereign credit rating to “BBB” from “BBB-”. The upgrade boosted sentiment in an otherwise cautious market environment.

The benchmark 10-year yield closed at 6.4003%, down 8 basis points — the steepest decline since May 13. Traders attributed the drop to renewed confidence in India’s credit outlook, with the upgrade seen as enhancing foreign investor appeal for local debt.

Despite the positive momentum, market participants noted that the near-term trajectory of yields will depend on developments in US-Russia talks scheduled over the weekend. Absent major geopolitical disruptions, the 10-year yield is expected to trade within a narrow 6.40%–6.48% band, with profit-taking likely if yields approach the lower limit.

Attention will also turn to the Reserve Bank of India’s upcoming policy meeting minutes for signals on growth prospects and the central bank’s interest rate stance. These insights will help shape expectations for future monetary easing or tightening.

Tenure	Today	Previous
10-year Gilt	6.40%	6.48%
5-year gilt	6.15%	6.20%
5-year OIS	5.67%	5.64%

The Indian rupee ended lower on Thursday, weighed by caution ahead of the upcoming Trump-Putin summit, though sentiment found some support from S&P’s sovereign rating upgrade for India.

The currency closed at 87.5500 per US dollar, weaker than Wednesday’s 87.4400, after fluctuating between 87.39 and 87.67 during a volatile session. Midday pressure was partially offset by the India’s sovereign rating upgrade, which S&P attributed to strong external position. The agency expects current account deficits to remain modest over the coming years, with a weaker rupee enhancing export competitiveness.

Market attention remains on the Trump-Putin meeting, which could influence the Russia-Ukraine conflict and trade dynamics. US President Trump has criticised India’s purchase of discounted Russian oil and recently announced a 25% hike in tariffs on Indian goods from August 27, doubling the rate to 50% — matching the highest US tariff rate applied to any country.

The rupee had touched 87.8850 last week after the tariff announcement, prompting intervention from the Reserve Bank of India to prevent a breach of the all-time low of 87.95. Traders believe the RBI will continue to defend this key level, but foreign policy shifts and geopolitical risks are expected to keep depreciation pressures alive in the near term.

Unit	Today	Previous
Dollar/Rupee	87.55	87.44
Dollar Index	97.84	97.64
1-year Dollar/rupee premium (%)	2.12%	2.10%

OUTLOOK
Equities are expected to remain sensitive to sector-specific developments and global risk appetite. The recent recovery in pharma, IT, and select financials may extend if earnings momentum holds, while midcaps could lag amid valuation concerns. However, US tariff actions and any escalation in geopolitical tensions could cap upside. Auto and FMCG counters may see selective buying, but metal and defence stocks could stay under pressure if global commodity trends weaken.

Bonds are likely to consolidate after S&P’s sovereign rating upgrade, which has improved sentiment. The 10-year benchmark yield may trade in the 6.40%-6.48% range, with profit-taking emerging near the lower bound. Traders will monitor US-Russia developments and domestic growth signals from the upcoming RBI policy minutes. Absent major external shocks, the improved credit outlook may keep yields supported, though corporate supply and global rate moves will influence direction.

The rupee is expected to face a depreciation bias despite RBI’s intervention, as persistent foreign portfolio outflows and higher US tariffs weigh on sentiment. Geopolitical headlines from the Trump-Putin summit and moves in the dollar index will be key drivers. Market participants believe the RBI will continue defending the 87.95 level, but volatility could increase if global risk-off sentiment intensifies.

Key Events & Data Due Monday:
Economic Data

• Eurozone June trade balance

Corporate Actions

• Mangalam Organics to consider fund raising
• Nuvoco Vistas Corp to consider fund raising