Equities Down on IT Drag, Bond Yields Rise as US CPI Looms, Rupee Weakens

HIGHLIGHTS

• Govt steps up push for GST rate rationalisation ahead of Council meet
• June CPI inflation eases to 2.1%, lowest since January 2019
• Nelco stock tanks after net profit falls 60% from last year, margin narrows
• Ola Electric jumps 16% after June quarter earnings improve from previous quarter
• Ahluwalia Contracts shares jump 6% on ₹20.89 billion order win from DLF

Indian equity benchmarks ended lower on July 14, marking the fourth consecutive session of decline, but the Nifty 50 managed to stay above the key 25,000 mark as late buying helped pare intraday losses. The Nifty closed at 25,082.30, down 67.55 points or 0.27%, after dipping to an intraday low of 25,001.95. The Sensex ended 247.01 points or 0.30% lower at 82,253.46.

Despite weakness in the headline indices, the broader market outperformed, with the BSE Midcap and Smallcap indices each rising 0.5%.  

Sectoral Performance
IT stocks dragged the market lower, with the Nifty IT index down 1%. In contrast, buying interest was seen in pharma, consumer durables, media, realty, and PSU banks, all of which gained between 0.5% and 1%.

Among individual stocks, Castrol India rose after the tribunal ruled in its favour in a longstanding tax dispute in Maharashtra. Ola Electric surged over 19% after reporting a narrowed Q1 loss of ₹428 crore. In contrast, DMart shares slipped following a lacklustre Q1 earnings report, with profits remaining flat. Aditya Birla Money dropped 5% after reporting a 6% fall in quarterly profit and a 10% decline in net interest income.

Overall, while the Nifty continued to face pressure from heavyweights and global uncertainty, the resilience in the broader market indicates selective buying. Investors will watch for cues from corporate earnings and global macro developments for short-term direction.

Top Gainers	% Change	Top Losers	% Change
NIFTY REALTY	1.39%	NIFTY IT	-1.11%
NIFTY MEDIA	1.36%	NIFTY FINANCIAL SERVICES	-0.19%
NIFTY HEALTHCARE INDEX	1.00%	NIFTY PRIVATE BANK	-0.05%
NIFTY CONSUMER DURABLES	0.88%	NIFTY OIL & GAS	-0.03%
NIFTY PHARMA	0.83%

Indian government bond yields edged higher on Monday as traders reacted to a sharp rise in US Treasury yields, while a steep drop in domestic retail inflation failed to shift sentiment significantly. The yield on the benchmark 10-year bond settled at 6.3163%, up from 6.2994% in the previous session.

Despite the uptick in benchmark yields, ultra-long duration bonds outperformed, with 30- to 50-year bond yields easing for the second consecutive session. A large state-run bank reportedly bought a substantial quantity of 50-year bonds on Friday, supporting demand at the long end of the curve and pulling yields lower by around 3 basis points.

India’s consumer price inflation slowed sharply to 2.10% in June—the lowest reading since January 2019—down from 2.82% in May. The data came in well below the market consensus of 2.50%, based on a Reuters poll. However, the softer inflation figure was largely anticipated and did little to influence the broader rate environment.

Globally, bond markets remained under pressure. The US 10-year Treasury yield climbed 8 basis points on Friday and remained elevated on Monday amid concerns that inflation in the world’s largest economy may not ease as quickly as expected.

Traders will now shift focus to the US retail inflation report, due after Indian market hours on Tuesday. Expectations are for a 0.3% month-on-month increase in consumer prices for June, up from May’s 0.1% rise. The outcome could influence rate-cut expectations and shape global bond yield movements, including in India.

Tenure	Today	Previous
10-year Gilt	6.31%	6.30%
5-year gilt	6.00%	5.96%
5-year OIS	5.72%	5.69%

The Indian rupee weakened past the 86-per-dollar mark on Monday, settling at its lowest level in over two weeks as corporate dollar demand and equity-related outflows weighed on sentiment. The rupee closed at 85.9850 against the US dollar, down 0.2% from Friday’s close of 85.80. Earlier in the session, it touched an intraday low of 86.0475, the weakest since June 25.

Traders cited strong dollar demand from a major Indian conglomerate and other corporates, alongside likely outflows from domestic equities, as key factors behind the rupee’s decline. Indian benchmark indices, the Sensex and Nifty 50, fell around 0.3%, underperforming regional peers, many of which traded higher.

Global risk sentiment turned cautious after US President Donald Trump over the weekend threatened a fresh 30% tariff on European imports, intensifying trade-related concerns. European stocks slipped and the euro edged lower against the dollar. Meanwhile, US equity futures also declined, with S&P 500 futures down 0.3%.

Amid the broader uncertainty, India remains one of the few major US trade partners yet to receive a formal tariff letter. Fresh rounds of negotiations are expected soon, focusing on differences over steel, auto components, and agricultural products.

Unit	Today	Previous
Dollar/Rupee	85.99	85.80
Dollar Index	97.91	97.77
1-year Dollar/rupee premium (%)	1.98%	1.98%

OUTLOOK
Indian equities may see a mixed start, with the Nifty 50 expected to trade within the 24,950–25,250 range. The benchmark will likely face resistance from persistent foreign outflows and profit booking in large-cap stocks. However, broader market strength may lend support, particularly in sectors such as realty, pharma, PSU banks, and consumer durables. IT stocks are expected to remain under pressure ahead of earnings from industry majors. Stock-specific action will continue in midcaps and smallcaps, where recent resilience suggests selective accumulation by domestic investors. Any further weakness in frontline indices may be met with buying interest near key support levels.

Indian government bonds may trade slightly firmer, supported by softer domestic inflation data and easing oil prices. However, upside in bond prices could be capped by firm US Treasury yields and expectations of continued liquidity withdrawal by the Reserve Bank of India. The 10-year benchmark yield is likely to hover in the 6.29%–6.33% band. Investors will track US CPI data due late Tuesday and look for RBI's next move on liquidity absorption, especially after its recent aggressive VRRR operations.

The Indian rupee is expected to remain under pressure in early trade amid persistent corporate dollar demand and lack of clarity on US-India trade negotiations. The currency may test the 86.00 mark again if the dollar strengthens further globally. However, signs of progress in trade talks or RBI intervention could limit downside. Near-term range for USD/INR is seen at 85.70–86.20. Traders will also monitor U.S. inflation data and equity flows for directional cues.

Key Events & Data Due Tuesday:
Economic Data

• German July ZEW Economic Sentiment Index
• Eurozone  May Industrial Production Data
• India June Trade Data
• China June Unemployment Rate
• China April-June GDP data
• China June Industrial Production Data
• US June CPI Data
• US NY Empire State July Manufacturing Index
• US OPEC Monthly Report  

Corporate Actions

• Earnings: AWL Agri Business, Bank of Maharashtra, Geojit Financial Services, GM Breweries, Hathway Cable & Datacom, HDB Financial Services, Himadri Speciality Chemical, Just Dial, Network18 Media & Investments, Neueon Towers, Nureca, Plastiblends India, Swaraj Engines
• Anupam Rasayan India to consider dividend
• Allcargo Terminals to consider fund raising
• Centrum Capital to consider fund raising
• Jtekt India to consider fund raising
• Osia Hyper Retail to consider fund raising
• Spandana Sphoorty Financial to consider fund raising
• Tembo Global Industries to consider fund raising

Policy Events

• Fed Vice Chair for Supervision Barr Speaks  
• FOMC Member Bowman Speaks