Market Digest:  RBI Rate Cut Fails To Cheer Equities; Gilt Yield At 40-Month Low

HIGHLIGHTS
  - RBI steps up easing cycle with another 25-bps rate cut, changes stance to accommodative
  - Vodafone Idea calls for further price hikes, focus on ARPU improvement
  - IT shares fall up to 4% after Jefferies' downgrade citing tariff hit on US growth
  - Oil falls to lowest since February 2021 as Trump's tariffs take effect
  - Glenmark shares crash 6% after USFDA order discloses 39 drugs recalled from US market

Indian equity markets closed in the red on Wednesday, as the Reserve Bank of India’s much-anticipated 25-basis-point rate cut failed to lift investor sentiment, global headwinds, particularly renewed tariff concerns from the US, overshadowed the policy move.

The RBI has also changed its stance to "accommodative" from its earlier stance of "neutral".

The NIFTY 50 declined 136.70 points or 0.61% to close at 22,399.15, while the SENSEX slipped 379.93 points or 0.51% to settle at 73,847.15. Both indices recouped some losses during the session, aided by selective buying in defensive and rate-sensitive sectors.

Market mood remained cautious as global trade tensions resurfaced following fresh tariff threats from the US and countermeasures from China. Information technology stocks led the decline, with Tata Consultancy Services falling 2% and Infosys dropping 2.16%, hurt by fears of a slowdown in overseas demand. HDFC Bank and State Bank of India also featured among top laggards, contributing to the broader weakness.

SECTORAL PERFORMANCE 
Except Consumer Durables and FMCG, all other sectoral indices ended in the red with Realty, IT and PSU Bank down 2%.

Top Gainers	% Change	Top Losers	% Change
NIFTY FMCG	1.8%	NIFTY PSU BANK	-2.5%
NIFTY CONSUMER DURABLES	0.2%	NIFTY IT	-2.2%
		NIFTY PHARMA	-2.0%
		NIFTY REALTY	-1.9%
		NIFTY METAL	-1.5%

Indian government bond yields continued to decline on Wednesday, extending their recent downward trend after the Reserve Bank of India delivered a dovish monetary policy decision and offered supportive guidance on liquidity.

The benchmark 10-year gilts yield closed at 6.4432%, marking its lowest level since December 20, 2021, and down from 6.4747% on Tuesday. 

The central bank’s commentary further reinforced market sentiment, as it committed to maintaining liquidity surplus in the system for the foreseeable future.

Governor Sanjay Malhotra stated that the RBI would target a liquidity surplus of around 1% of net deposits, ensuring effective policy transmission through the banking system. This clarity on liquidity management encouraged strong demand for sovereign papers across tenors, particularly from institutional investors.

Tenure	Today	Previous
10-year Gilt	6.44%	6.47%
5-year gilt	6.26%	6.31%
5-year OIS	5.75%	5.77%

The Indian rupee depreciated for the fourth consecutive session on Wednesday, settling 45 paise lower at 86.71 against the US dollar, weighed down by persistent foreign capital outflows and cautious market sentiment amid global trade tensions.

The rupee has now weakened over ₹1.40 against the dollar in the last four sessions.

Despite a retreat in global crude oil prices and a softer US dollar, the rupee continued to face pressure as investor appetite for risk remained subdued. Weakness in domestic equities added to the currency’s woes, with foreign institutional investors steadily pulling out funds from Indian markets.

RBI Governor Sanjay Malhotra, addressing the media after the central bank's monetary policy review, clarified that the Reserve Bank does not target any specific exchange rate level. “Our interventions are strictly to manage excessive or disruptive volatility,” Malhotra said, reinforcing the RBI’s long-standing stance on currency management.

Unit	Today	Previous
Dollar/Rupee	86.71	86.27
Dollar Index	101.84	102.70
1-year Dollar/rupee premium (%)	2.30%	2.33%

OUTLOOK
The Indian equity markets are expected to remain volatile this week, with a negative bias, as escalating global trade tensions and currency fluctuations weigh on investor sentiment. 

Foreign Institutional Investors have resumed selling Indian equities, and the rupee's sharp depreciation, has only added to the cautious stance. 

The market will remain closed on Thursday for Shri Mahavir Jayanti. 

Key Events & Data Due Thursday and Friday
Economic Data:
 - China March CPI data
 - China March PPI data
 - US March CPI data
 - US weekly jobless claims data

Corporate Actions:
 - Anand Rathi Wealth to consider earnings and dividend
 - Tata Consultancy Services to consider earnings and dividend
 - RACL Geartech to consider fund raising
 - Silgo Retail to consider fund raising
 - Mangal Credit and Fincorp to consider fund raising
 - Orient Cement to consider earnings and dividend

Policy:
 - US FOMC Member Bowman speaks
 - US FOMC Member Harker speaks