Dalal Street Rallies on Tariff Relief; Bonds, Rupee Join the Party

HIGHLIGHTS

• Car sales hit record high, but growth slows to four-year low: SIAM
• March CPI falls to 3.34%, the lowest since August 2019
• HDFC Bank soars after cutting savings rate; Nifty Bank hits YTD high 
• Transrail Lighting shares jump 8% on Rs 1,085 crore order win
• Indian Hotels shares rise 6% as company expands portfolio to 380 hotels in FY25
• Inox Green extends rally amid buzz of IPO by group’s clean energy arm

Indian equity markets staged a powerful rebound today, reversing all the losses seen since April 2, when Donald Trump announced the reciprocal tariff rates. Benchmark indices surged, supported by broad-based sectoral gains and renewed optimism on the trade policy front. Hopes of a softer stance from Trump lifted global investor sentiment, boosting equities across the board.

The NIFTY 50 and SENSEX posted strong gains, while midcap and smallcap stocks also rallied sharply, reflecting widespread participation. 

SECTORAL PERFORMANCE 
All 13 Nifty sectoral indices closed in the green, with auto and realty indices leading the rally. Trump’s comments hinting towards a likely reversal in auto tariffs lifted the Nifty Auto index by more than 5%. Tyre manufacturers mirrored the auto sector’s strength, rising between 3% and 4%. The Nifty Realty index soared nearly 8%, bolstered by Lodha Group shares, which gained on reports of a resolution between the promoter siblings.

Further supporting the rally, agri and fertiliser stocks gained traction after the India Meteorological Department forecasted an above-normal monsoon, boosting rural demand prospects. This lifted sentiment in agriculture-linked sectors, often seen as barometers for rural economic activity.

Top Gainers	% Change
NIFTY REALTY	5.6%
NIFTY AUTO	3.4%
NIFTY METAL	3.2%
NIFTY MEDIA	3.0%
NIFTY FINANCIAL SERVICES	3.0%

Indian government bond yields extended their downward momentum on Tuesday, with the benchmark 10-year yield plunging to a level not seen in over three years. This slide in yields is being driven by the Reserve Bank of India's sustained policy support and fresh signs of cooling inflation.

Investor sentiment received a strong boost after the RBI announced late Friday, that it would purchase ₹400 billion worth of gilts this week. This move aligns with the central bank’s previous bond purchases in the first two weeks of April and matches the scheduled amounts for the coming fortnight. The consistent scale of intervention has reassured markets of the RBI’s commitment to maintaining adequate liquidity in the financial system.

So far in 2025, the RBI has infused ₹5.41 trillion into the banking sector via open market operations and foreign exchange swaps. This aggressive liquidity push has helped anchor bond yields, particularly at the long end of the curve, even amid global uncertainties and a recent uptick in US Treasury yields.

Tenure	Today	Previous
10-year Gilt	6.41%	6.45%
5-year gilt	6.18%	6.23%
5-year OIS	5.69%	5.71%

The Indian rupee appreciated for the second consecutive session, strengthening by 28 paise to settle at 85.77 against the US dollar, supported by a combination of domestic and global factors. A sharp rally in domestic equity markets and sustained weakness in the greenback helped boost sentiment for the local currency.

A key catalyst for the rupee’s rise was the US administration's recent decision to suspend an additional 26% tariff on Indian exports until July 9, a move that eased trade-related anxieties and improved investor outlook.

Globally, the US dollar had been under pressure for five straight sessions before stabilising mildly. Market participants remain cautious due to persistent fears that President Trump’s tariff measures could push inflation higher and potentially trigger a slowdown in the US economy.

Unit	Today	Previous
Dollar/Rupee	85.77	86.05
Dollar Index	99.58	99.89
1-year Dollar/rupee premium (%)	2.20%	2.20%

OUTLOOK
Today’s market action signaled strong investor conviction. As global uncertainties remain, the Indian market’s resilience highlights its relative stability and potential for continued upward momentum in the near term.

Data showing a moderation in inflation has supported bond prices. Lower inflation eases pressure on the central bank to tighten policy, reinforcing the outlook for a low-yield environment. As a result, the Indian bond market remains buoyant, with yields expected to remain soft in the near term.

With improving domestic fundamentals and supportive global cues, the Indian rupee may continue to trade with a firm bias in the near term.

Key Events & Data Due Wednesday

Economic Data:

• China Jan-Mar GDP 
• Eurozone March CPI data 
• US March Retail Sales 
• US Weekly Crude Oil Inventories 

Corporate Actions:

• Earnings: Wipro, Angel One, Waaree Renewable Technologies, GTPL Hathway, and Ballarpur Industries

Other: 

• US Fed Chair Powell speaks
• SC to hear pleas challenging Waqf Act