Equities Rise For Third Day; Gilts Rally Ahead Of RBI’s OMO Auction

HIGHLIGHTS

• City gas distribution companies fell up to 6% on fresh reduction in gas allocation
• Lupin, Zydus Life fall up to 8% after losing a patent litigation case in US court
• IndusInd Bank gains as probe finds impact in derivatives portfolio lower than estimates
• ICICI Prudential shares rise 3% on margin surprise
• IREDA shares jump 7% on robust earnings, net profit soars 49%

Indian equity markets extended their winning streak for a third straight session on Wednesday. The rally was sparked by reports that China is open to fresh trade talks with the US, easing global tensions and improving investor sentiment.

The Sensex climbed 0.40%, while the Nifty 50 rose 0.47%. Broader markets outperformed, with the BSE Midcap gaining 0.5% and the Smallcap index rising nearly 1%. 

Positive domestic cues such as the forecast of a normal monsoon and easing inflation figures further supported the uptrend. 

SECTORAL PERFORMANCE 
Sectorally, media, PSU banks, and oil & gas stocks led the gains, while auto, IT, and pharma stocks faced selling pressure. PSU banks were particularly strong among midcaps, helping anchor the rally.

Stock-specific action was vibrant. IndusInd Bank surged 7% after its derivatives-related hit was seen to be lower than feared. ICICI Prudential Life Insurance gained 3% as its January-March profit jumped 122%, while IREDA climbed 5% after reporting a 48% rise in consolidated profit. On the downside, Mahanagar Gas dropped 5% following the Centre’s move to trim priority gas allocations.

Top Gainers	% Change	Top Losers	% Change
NIFTY PSU BANK	2.4%	NIFTY AUTO	-0.4%
NIFTY MEDIA	1.9%	NIFTY PHARMA	-0.2%
NIFTY PRIVATE BANK	1.7%	NIFTY HEALTHCARE INDEX	-0.2%
NIFTY BANK	1.4%
NIFTY OIL & GAS	1.3%

Indian government bond yields eased further on Wednesday, driven by strong demand for shorter-duration gilts ahead of the Reserve Bank of India’s scheduled open market operation. The yield on the benchmark 10-year bond slipped below the key psychological level of 6.40%, ending the session at 6.3889%, down from 6.4142% in the previous close.

Shorter-duration bonds saw a steeper decline, with yields falling by 5–7 basis points, as traders positioned themselves ahead of the RBI’s ₹400 billion bond purchase scheduled for Thursday. 

Tenure	Today	Previous
10-year Gilt	6.39%	6.41%
5-year gilt	6.12%	6.18%
5-year OIS	5.68%	5.69%

The Indian rupee extended its winning streak for a third consecutive session today, ending 9 paise stronger at 85.68 against the US dollar. 

Despite a rise in global crude oil prices, the rupee held firm, largely aided by continued weakness in the US dollar. The dollar index, which tracks the greenback’s performance against a basket of major currencies, fell 0.66% to 99.55—its lowest level since April 2022. The decline was attributed to rising geopolitical tensions and the US’s fresh tariff measures on Chinese goods, which now face duties of up to 245%.

Domestically, encouraging macroeconomic data further supported the rupee. India’s retail inflation softened to 3.34% in March, down from 3.61% in February, marking the lowest reading since August 2019. 

Unit	Today	Previous
Dollar/Rupee	85.77	85.77
Dollar Index	99.37	99.96
1-year Dollar/rupee premium (%)	2.19%	2.20%

OUTLOOK
Indian equity markets are likely to extend their winning streak on Thursday, supported by improving domestic fundamentals and easing global trade tensions. A positive shift in global sentiment, following China's openness to resume trade talks with the US, has reduced investor anxiety and lifted risk appetite.

On the domestic front, the outlook remains constructive. A forecast of a normal monsoon and the softening of retail inflation to 3.34% in March—the lowest reading since August 2019—have further strengthened market confidence. These developments, along with the Reserve Bank of India's sustained liquidity support through open market operations, continue to provide a solid underpinning for equity gains.

Additionally, the Indian rupee has shown steady resilience despite firming crude oil prices, aided by the weakening dollar and favourable economic indicators. This stability in the currency market adds to the broader sense of macroeconomic reassurance.

Key Events & Data Due Thursday

Economic Data:

• Japan March trade data
• US March housing starts data
• US weekly initial jobless claims data
• US April Philadelphia Fed Manufacturing index
• US Baker Hughes Oil Rig Count data

Corporate Events:

• Jan-Mar Earnings: Infosys, HDFC Asset Management Company, Jio Financial Services, HDFC Life Insurance Company, Mahindra EPC Irrigation, Tata Elxsi, Indosolar,  E2E Networks, and Shrenik
• Himatsingka Seide board to consider fund raising
• IDFC First Bank board to consider fund raising

Policy:

• Bank of Japan board member Nakagawa speaks  
• European Central Bank monetary policy announcement
• US Fed Vice Chair Barr speaks