Equity Snaps 7-Day Rally Amid Profit-Booking, Weak HUL Guidance

HIGHLIGHTS

• UBS upgrades India to 'Neutral' but finds better risk-reward in China
• Hindustan Unilever's weak margin guidance sends shares 4% lower
• Airtel seeks equity conversion of statutory dues, wants a level-playing field
• IndusInd Bank presses pause button on onboarding new MFI customers
• Russian insurers seek to facilitate India oil delivery
• US Treasury Secretary says India likely to be first to sign trade deal with Washington

Indian equities ended lower on Thursday, snapping a seven-day winning streak, as profit-booking emerged amid the expiry of monthly derivatives contracts. The session remained largely rangebound, with traders adopting a cautious approach following recent sharp gains across benchmarks.

The Nifty 50 closed marginally lower, dragged by weakness in FMCG and real estate stocks. Hindustan Unilever was the biggest laggard, tumbling nearly 4% after its management projected operating margins would remain in the 22–23% range. The subdued forecast fell short of street expectations and triggered broad-based selling in the FMCG pack. Bharti Airtel, Eicher Motors, ICICI Bank, and Eternal also contributed to the decline, weighing on market sentiment.

SECTORAL PERFORMANCE 
Among sectoral indices, the FMCG and realty segments slipped 1% each, reflecting concerns over valuations and cautious outlooks. On the other hand, the pharma index posted a 1% gain, supported by strong performances from Dr Reddy’s Labs and other frontline drugmakers.

Despite the subdued market tone, select stocks in cement and auto held firm. IndusInd Bank, UltraTech Cement, Grasim Industries, and Tata Motors ended higher, providing some cushion to the broader indices.

Top Gainers	% Change	Top Losers	% Change
NIFTY PHARMA	1.1%	NIFTY REALTY	-1.4%
NIFTY HEALTHCARE INDEX	0.4%	NIFTY FMCG	-1.1%
NIFTY METAL	0.2%	NIFTY FINANCIAL SERVICES	-0.5%
NIFTY MEDIA	0.1%	NIFTY CONSUMER DURABLES	-0.4%
		NIFTY BANK	-0.3%

Yields on Indian government bonds declined on Thursday, reversing early-session rise, as late-day short covering outweighed persistent geopolitical concerns. The yield on benchmark 10-year bond closed at 6.3216%, down from 6.3294% on Wednesday. Earlier in the session, yields had climbed as high as 6.3586% due to nervous sentiment amid heightened regional tensions.

Geopolitical jitters—particularly following recent security incidents—kept traders on edge through much of the day, prompting cautious positioning. 

Adding to the cautious mood was a sharp narrowing in the banking system’s liquidity surplus. Data from the Reserve Bank of India showed surplus liquidity shrinking to ₹787 billion as of April 23, down significantly from over ₹2 trillion the previous week.

Tenure	Today	Previous
10-year Gilt	6.32%	6.33%
5-year gilt	6.10%	6.08%
5-year OIS	5.66%	5.67%

 The Indian Rupee ended stronger on Thursday, staging a recovery after opening on a weak note amid rising geopolitical tensions and firm crude oil prices. The domestic currency closed at 85.26 per dollar, gaining 16 paise from Wednesday’s close of 85.42.

At the start of the session, the rupee had weakened to 85.59, reflecting investor caution following a terror attack in Pahalgam, Jammu & Kashmir. Geopolitical concerns, coupled with a jump in global oil prices, weighed on early sentiment. India, being a major crude importer, remains highly sensitive to oil price fluctuations due to their impact on the trade deficit and inflation expectations.

However, the rupee reversed losses through the day, supported by a mild retreat in the dollar index.

Unit	Today	Previous
Dollar/Rupee	85.26	85.42
Dollar Index	99.12	99.64
1-year Dollar/rupee premium (%)	2.18%	2.10%

OUTLOOK
Equities are likely to open on a cautious note on Friday, following Thursday’s profit-booking and expiry-driven volatility. After a seven-session winning streak, markets may witness further consolidation as investors await fresh cues from corporate earnings.

The bond market is expected to trade with a steady tone. The benchmark 10-year bond yield may hover around the 6.32% mark, as investors weigh geopolitical risks and reduced banking system liquidity. Any signs of further escalation in tensions could push yields higher temporarily, but overall sentiment remains anchored by expectations of a supportive stance from the Reserve Bank of India.

The Indian Rupee is likely to open with a slight positive bias, after recovering early losses on Thursday. Easing in the dollar index and a softening of US rhetoric on trade and monetary policy may help the rupee stabilise, though rising crude oil prices and lingering geopolitical risks could cap gains. 

Key Events & Data Due Friday:
Economic Data

• US April Michigan Consumer Sentiment index
• US Baker Hughes oil rig count
• India weekly FX reserves

Corporate Actions

• Jan-Mar Earnings:  Reliance Industries, Maruti Suzuki India, Shriram Finance, Automotive Stampings and Assemblies,  Cholamandalam Investment and Finance Company, Hindustan Zinc,  Jayaswal Neco Industries,  Kesoram Industries,  Mahindra Holidays & Resorts India,  Navkar Corporation,  Atul,  Chennai Petroleum Corporation,  Force Motors,  L&T Finance, Oracle Financial Services Software,  Orient Electric,  Poonawalla Fincorp,  RBL Bank,  Rossari Biotech,  Tata Technologies, Tejas Networks, VST Industries, Zensar Technologies, DCB Bank, Lloyds Metals And Energy, Bank of Maharashtra, Dr. Lal Path Labs, Mahindra Lifespace Developers, Oriental Hotels, Sarla Performance Fibers, Sasken Technologies, Motilal Oswal Financial Services, Aurum PropTech, New Delhi Television, 
• Aurum PropTech to consider fund raising plan
• Ramco Cements to consider fund raising plan

Policy Events

• FOMC Member Kashkari Speaks