Equities Rise, Bond Yields Steady, Rupee Recovers Slightly Amid Oil Dip 

HIGHLIGHTS

• HDB Financial CEO says ₹25 billion fresh issue to fuel growth for 3-4 years
• PFC, REC, IREDA shares gain up to 6% on easier project financing norms
• HAL to build small satellite rockets after securing ISRO tech in ₹5.11 billion deal
• Dilip Buildcon up 4% after ₹13.41 billion order win from Konkan Railway
• Suzlon Energy gains after bagging 170 MW order from AMPIN Energy Transition

Indian equities closed the week on a strong note, with the Nifty 50 ending above the key 25,000 mark on Friday, buoyed by broad-based gains across sectors despite ongoing geopolitical tensions in West Asia. The benchmark indices staged a solid recovery from last week’s losses, supported by easing domestic concerns and sustained institutional buying.

The rally was broad, with all sectoral indices finishing in the green. Notable strength was seen in metal, PSU bank, realty, power, telecom, and capital goods stocks, which rose 1–2%. Market breadth was firmly positive, with 44 of the 50 Nifty constituents ending higher and an advance-decline ratio of 2:1, indicating strong participation across the board.

Sectoral Performance
Heavyweights such as HDFC Bank, Reliance Industries, and ICICI Bank, were key drivers of the market’s upward momentum. JIO Financial Services led the gainers on the Nifty, climbing nearly 3%, while Bharti Airtel also rallied 3% to a new record high amid continued investor interest.
Information technology stocks posted modest gains ahead of Accenture’s earnings release, which is often seen as a bellwether for global tech demand. Meanwhile, infrastructure finance companies like REC, PFC, IREDA, and HUDCO saw buying interest after the Reserve Bank of India relaxed norms on long-term project lending, boosting sentiment in the power finance space.

Top Gainers	% Change
NIFTY REALTY	2.11%
NIFTY PSU BANK	1.64%
NIFTY FINANCIAL SERVICES	1.33%
NIFTY BANK	1.22%
NIFTY METAL	1.09%

Indian government bond yields ended slightly higher for the week on Friday, as persistent concerns over elevated crude oil prices overshadowed recent dovish signals from the Reserve Bank of India. The benchmark 10-year gilts yield closed at 6.3087%, nearly unchanged from 6.3095% in the previous session, while the five-year 6.75% 2029 bond yield eased marginally to 6.0176% from 6.0236%.

Brent crude remained a key driver of market sentiment, hovering around $77 per barrel. The benchmark contract has climbed 4.2% this week, following an 11.7% surge last week amid escalating tensions between Iran and Israel. Uncertainty over possible U.S. involvement in the conflict kept investors cautious, as any further rise in oil prices could pose upside risks to India’s inflation trajectory.

India, which imports the majority of its crude oil requirements, remains vulnerable to external price shocks. While the RBI earlier this month cut its key repo rate by 50 basis points and lowered its inflation forecast for FY25 to 3.7%, it also shifted its policy stance to "neutral" from "accommodative," signalling a likely end to the current easing cycle.

However, bond traders took some comfort from comments by RBI Governor Sanjay Malhotra, who indicated that lower-than-expected inflation could create space for future policy action. Despite this, with oil prices staying elevated and geopolitical tensions unresolved, traders remained cautious and positioned conservatively ahead of further macro developments.

Tenure	Today	Previous
10-year Gilt	6.31%	6.31%
5-year gilt	6.02%	6.02%
5-year OIS	5.75%	5.75%

The Indian rupee ended slightly higher on Friday at 86.5850 against the US dollar, recovering from the previous close of 86.7225. However, the currency still registered a weekly loss of 0.6%, marking its second consecutive week of decline amid sustained geopolitical tensions in the West Asia and elevated crude oil prices.

While the rupee found mild support on the day from a pullback in global oil prices and easing fears of immediate US involvement in the Israel-Iran conflict, sentiment remained fragile. Brent crude, which had surged to a five-month high of $79.04 per barrel earlier in the week, fell over 2% on Friday, offering brief respite to oil-sensitive currencies like the rupee.

Despite this, analysts caution that the rupee’s outlook remains vulnerable to global risk sentiment and oil market volatility. With India importing a majority of its crude oil, any sharp uptick in prices could worsen the current account outlook and exert pressure on the local currency.

In the near term, focus will also shift to potential foreign portfolio inflows from a major IPO scheduled next week. A strong response from overseas investors could help the rupee consolidate around the 86.50 level. However, if oil resumes its upward trend or geopolitical tensions intensify, the rupee could breach the 87 mark.

The dollar index hovered near 98.6, slightly weaker on the day but up for the week, indicating ongoing demand for safe-haven assets. 

Unit	Today	Previous Day
Dollar/Rupee	86.59	86.72
Dollar Index	98.25	98.94
1-year Dollar/rupee premium (%)	1.88%	1.88%

OUTLOOK
Indian equities are expected to open on a cautious note next week, with investors likely to track geopolitical updates closely. Broader markets may stay under pressure following the recent correction in mid- and small-cap stocks. However, easing domestic concerns and positive momentum in large-cap names like Reliance Industries, ICICI Bank, and Bharti Airtel could offer a stabilising effect. 

Bond yields are expected to remain range-bound with a slight upward bias, as investors will keep an eye on crude oil prices. Elevated oil prices and the RBI’s neutral stance suggest limited room for further rate cuts. The 10-year benchmark yield may hover near 6.30% in the near term, with traders cautious ahead of further data and geopolitical clarity.

The rupee is likely to remain under pressure but could find temporary support if foreign portfolio inflows linked to upcoming HDB Financial IPOs materialise. Crude prices and Middle East tensions will be key to near-term direction. If oil stays elevated and the dollar remains firm, the rupee may test the 87 level, though RBI intervention could temper excessive volatility.

Key Events & Data Due Monday:

Economic Data

• India June provisional PMI data
• Eurozone June provisional PMI data
• UK June provisional PMI data
• US June provisional PMI data
• US May existing home sales data

Corporate Actions

• Mangal Credit and Fincorp to consider fund raising
• Astec LifeSciences to consider fund raising
• Scoda Tubes to approve Jan-Mar consider earnings

Policy Events

• US FOMC Member Bowman speaks
• German Buba President Nagel speaks