Banks Power Indian Equities’ Rebound To $5 Trillion Market Cap

HIGHLIGHTS

• Nomura sees Nifty at 24,970 by March 2026, backs domestic themes amid tariff headwinds
• Nifty Bank surges past 55,000 mark for the first time ever on earnings optimism
• BHEL reports highest ever order inflows of ₹925.3 billion in FY25
• Tata Elxsi shares surge 10% after management expects growth to return from April-June
• HDFC AMC shares rise 4% on strong January-March results
• Just Dial shares zoom 13% as company's net profit jumps 61%

Indian equities extended gains for a fifth straight session on Monday, buoyed by strong earnings from major banks and broad-based buying. The Nifty Bank index surged nearly 2% to hit a record high, and closed above 55,300. This rally, led by ICICI Bank and HDFC Bank after solid quarterly results, helped Indian markets reclaim the $5 trillion mark in market capitalisation.

IndusInd Bank rose 4% in a single day, bringing its monthly gain to 28%. Mid-tier banks also rallied 4-5%, driving a 1,300-point upmove on the Nifty Midcap 100—reflecting improved investor appetite across financials.

SECTORAL PERFORMANCE 
Among sectoral movers, IT stocks, which had been under pressure, rebounded after Infosys issued encouraging FY26 growth guidance. Tata Elxsi jumped 9%, despite a subdued January-March performance, as forward-looking commentary lifted sentiment.

Capital market-related stocks continued their upward march. BSE and CDSL each gained 6%, lifted by the broader market rally and overall optimism. Upbeat management commentaries suggest investor confidence is strengthening, especially in financial and tech sectors.

Indian government bond yields declined sharply, driven by expectations of continued liquidity support and potential rate cuts by the Reserve Bank of India. The benchmark 10-year gilt yield dropped to 6.3164%, its lowest level since November 2021, as compared to the previous close of 6.3709%.

The bond market remained buoyant ahead of the RBI’s planned purchase of ₹200 billion worth of government securities on Tuesday, with another operation of similar size scheduled for next week. These measures are part of the central bank's broader effort to infuse liquidity and stabilise yields amid evolving macroeconomic conditions.

So far in 2025, the RBI has injected ₹5.81 trillion through a combination of bond purchases and foreign exchange swaps. These efforts have significantly supported the bond market, with participants expecting further easing in the coming months.

Additionally, strength in the Indian rupee has added to investor optimism, making local bonds more attractive to foreign investors.

The Indian Rupee strengthened for the fifth straight session on Monday, closing at 85.13 against the US dollar, up 25 paise from Thursday’s close of 85.38. Over the past five sessions, the rupee has appreciated by nearly ₹1.55, supported by falling crude oil prices, robust foreign inflows, and broad-based weakness in the dollar index. Foreign portfolio investors infused approximately ₹85 billion into Indian stocks last week, reversing earlier outflows.

The dollar index declined to 97.92, its lowest in three years, amid heightened concerns over political interference in the US Federal Reserve. Comments from a White House adviser suggesting legal efforts to remove Fed Chair Jerome Powell spooked investors and weighed on the dollar. Uncertainty around US trade policy has also triggered fears of slower growth and rising inflation, pushing the dollar down 5.5% so far this month.

OUTLOOK
Indian equity markets are likely to open on a firm footing on Tuesday, for the sixth straight session amid renewed investor confidence driven by strong corporate earnings. 

Investor sentiment remains positive, especially in financial and mid-tier banking stocks, which have witnessed notable traction. 

In the bond market, focus will be on the RBI’s ₹200 billion government securities purchase scheduled for Tuesday.  

The rupee’s strength, combined with foreign inflows amid rising political uncertainty in the US, could continue to lend support to the domestic currency in the near term.

Key Events & Data Due Tuesday:
Economic Data

• Japan core CPI data

Corporate Actions

• Jan-Mar Earnings:  HCLTechnologies,  Mahindra & Mahindra Financial Services,  Choice International,  Cyient DLM, Hathway Cable & Datacom,  Huhtamaki India,  Mahindra & Mahindra Financial Services,  Sampann Utpadan India,  Sanginita Chemicals,  Waaree Energies,  AU Small Finance Bank,  Delta Corp,  Havells India,  Tata Communications,  and Vardhman Special Steels.
• 360 ONE WAM to consider fund raising 
• Muthoot Capital Services to consider fund raising

Policy Events

• IMF meetings
• ECB President Lagarde speaks
• ECB's De Guindos speaks
• US FOMC Member Kashkari speaks 
• US Fed Governor Jefferson speaks
• US FOMC Member Harker speaks