Equities Hit 2025 Highs; Bonds Rally On RBI Liquidity Support

HIGHLIGHTS

• M&M March quarter net profit rises 22% to ₹24.37 billion
• DFS Secretary denies plans to merge state-owned insurers
• Defence shares jump up to 5% amid India-Pak tensions
• Adani Group stocks rise up to 11% amid report of Gautam Adani's aides meeting Trump officials
• Vehicle retail sales gain 7.6% in April 2025, commerical vehicles witness decline

Indian equity benchmarks ended at new 2025 highs on Monday, led by robust buying in mid- and small-cap segments and gains across crude-sensitive sectors. A sharp decline in global crude oil prices spurred optimism across downstream energy and consumer-facing sectors, helping sustain the bullish sentiment.

The broader market outperformed frontline indices, with the Nifty Midcap 100 index jumping 2% to 54,676. The advance-decline ratio stood firmly at 5:2, indicating broad-based participation in the rally.

Sectoral Performance
Lower crude oil prices acted as a tailwind for several sectors. Downstream oil marketing companies—BPCL, HPCL, and Indian Oil Corp—rose sharply on margin improvement hopes. Paint manufacturers and airline stocks also rallied, benefiting from expected easing in raw material costs.

The Nifty Metal index gained over 1%, snapping a three-day losing streak, supported by a rebound in global commodity prices. Meanwhile, Mahindra & Mahindra rallied more than 3% after reporting better-than-expected earnings, with strong performance in its tractor division.

Adani Group stocks attracted investor attention after reports surfaced that representatives of Gautam Adani had met with officials from the US administration to address pending criminal charges, triggering a sentiment boost.

Top Gainers	% Change	Top Losers	% Change
NIFTY AUTO	1.85%	NIFTY PRIVATE BANK	-0.80%
NIFTY OIL & GAS	1.70%	NIFTY BANK	-0.36%
NIFTY FMCG	1.22%	NIFTY PSU BANK	-0.04%
NIFTY METAL	0.96%
NIFTY CONSUMER DURABLES	0.95%

Indian government bond yields dropped sharply on Monday, supported by the Reserve Bank of India’s aggressive bond-buying schedule and easing global crude oil prices. The benchmark 10-year gilts yield declined by 3 basis points to close at 6.3247%, continuing its downward trend driven by strong demand and favourable macro cues.

The market rallied in anticipation of the RBI's large-scale open market operations set to begin this week. The central bank is scheduled to purchase ₹500 billion worth of government securities on Tuesday, followed by ₹250 billion on Friday, and another ₹500 billion spread across the following two weeks. This proactive liquidity infusion has bolstered confidence among fixed-income investors, who are now positioning themselves ahead of these supportive actions.

The softening of global crude oil prices further aided sentiment in the bond market. Brent crude futures have now fallen for six straight sessions, most recently slipping 1.09% to $60.62 per barrel. Lower oil prices are typically disinflationary for India, which imports most of its energy needs, and reduce the fiscal and inflationary risks that could otherwise put upward pressure on bond yields.

Tenure	Today	Previous
10-year Gilt	6.32%	6.35%
5-year gilt	6.06%	6.08%
5-year OIS	5.59%	5.59%

The Indian rupee firmed on Monday, supported by a combination of global and domestic tailwinds. It ended the session at 84.25 against the U.S. dollar, marking a 0.4% appreciation. The currency had briefly touched an intraday high of 84.1275 before trimming gains in the latter half of the trading day due to persistent dollar demand from importers and a large foreign bank.

The broader weakness in the US dollar, with the dollar index easing 0.2% to 99.6, lent support to the rupee. Additionally, strength in the offshore Chinese yuan, which surged to a near six-month high of 7.1876, buoyed emerging market currencies, including the rupee. The yuan rallied on renewed optimism around trade negotiations between China and the United States.

Falling crude oil prices further lifted sentiment in the Indian currency market. Brent crude fell more than 2% after OPEC+ agreed to accelerate output hikes, raising concerns about oversupply amid subdued global demand. Lower oil prices are a positive for India, which imports the majority of its energy needs, as they reduce the country’s import bill and improve the current account balance.

Unit	Today	Previous
Dollar/Rupee	84.25	84.51
Dollar Index	99.43	99.84
1-year Dollar/rupee premium (%)	2.25%	2.26%

OUTLOOK
Indian equity markets are expected to trade with a positive bias in the near term, supported by strong earnings momentum in key sectors like oil & gas, financials, and select consumer-focused names. Mid- and small-cap stocks may continue to outperform on the back of improved market breadth and investor risk appetite. However, global cues, especially geopolitical developments and central bank commentary from major economies, could inject volatility.

In the bond market, yields are likely to remain under downward pressure, anchored by the RBI’s continued open market operations. The central bank’s upcoming bond purchase will likely support demand for government securities. Falling crude oil prices and steady inflation readings could further aid the bullish tone in bonds, especially for the new 10-year benchmark.

The rupee is expected to hold its firm footing, aided by declining oil prices, strong foreign fund inflows, and a softening US dollar. Gains in the Chinese yuan may also lend support. However, persistent dollar demand from importers and any flare-up in geopolitical tensions could create short-term headwinds. 

Key Events & Data Due Tuesday:
Economic Data

• China April Caixin Services PMI
• India April S&P Global Services PMI
• Eurozone April Composite PMI
• US March trade data

Corporate Actions

• Jan-Mar earnings: Aadhar Housing Finance,  Aarti Drugs, Ador Welding, Alembic Pharmaceuticals, Aptus Value Housing Finance India, Bank of Baroda, BSE, Century Enka, CG Power and Industrial Solutions, Cybertech Systems And Software,     Godrej Consumer Products, Hindustan Petroleum Corporation, JBM Auto, Kajaria Ceramics, Kansai Nerolac Paints,     KEI Industries,  Mahanagar Gas,  One 97 Communications, Paradeep Phosphates, Piramal Enterprises, Poly Medicure, Polycab India, Quick Heal Technologies, Radico Khaitan,  Safari Industries (India),  Sambhaav Media, Shipping Corporation of India. Sundaram Clayton, and Tamilnadu PetroProducts
• Housing & Urban Development Corporation to consider fund raising
• Puravankara to consider fund raising

Policy Events

• US FOMC meeting starts