Nifty Holds 25,000; Rupee Ends Higher Despite Wider Trade Deficit

HIGHLIGHTS

• Vodafone Idea warns of not being able to continue beyond FY26 without more govt help
• BEL, Cochin Shipyard, Mazagon, others surge up to 15%
• Hyundai March quarter net profit drops 4% to ₹16.14 billion
• Swiggy, Zomato rise up to 3% membership perks cut ahead of monsoon

Indian equities cooled off on Friday after hitting a seven-month high in the previous session, with benchmark indices trading in a narrow range and the Nifty 50 ending just above the 25,000 mark.

Despite the subdued close in headline indices, broader markets continued to show strength. The BSE Midcap index gained 0.9%, while the Smallcap index added 1.9%, reflecting sustained investor interest in non-frontline stocks. Positive sentiment in midcaps has remained resilient even as large-cap buying took a breather.

For the week, Indian equities registered strong gains. The BSE Sensex and NSE Nifty 50 rose around 4% each, delivering one of the best weekly performances in recent months. The rally was broad-based, supported by easing geopolitical concerns, favourable macroeconomic data, and continued participation across sectors.

Sectoral Performance
On Friday, buying was concentrated in media, power, PSU, realty, and capital goods stocks, with sectoral indices rising 1–1.7%. However, the IT index lagged, falling nearly 1% as heavyweight stocks like Infosys and HCL Technologies faced selling pressure.

Among Nifty gainers were Bharat Electronics, Bajaj Auto, Adani Enterprises, Tata Consumer, and Eternal. On the other hand, Bharti Airtel, JSW Steel, Infosys, SBI, and HCL Technologies weighed on the index.

Defence-related counters remained in focus following continued investor appetite in strategic manufacturing. Overall, despite Thursday’s consolidation, the week’s performance underlines firm domestic investor sentiment ahead of key global and policy developments.

Top Gainers	% Change	Top Losers	% Change
NIFTY REALTY	1.63%	NIFTY IT	-0.84%
NIFTY MEDIA	1.11%	NIFTY HEALTHCARE INDEX	-0.30%
NIFTY FMCG	0.66%	NIFTY METAL	-0.09%
NIFTY CONSUMER DURABLES	0.63%	NIFTY PHARMA	-0.08%
NIFTY AUTO	0.62%	NIFTY FINANCIAL SERVICES	-0.03%

Indian government bonds posted their sharpest weekly rally in six weeks, driven by renewed investor confidence following easing geopolitical tensions, soft inflation data, and ample banking system liquidity.

The yield on the newly-issued 10-year benchmark, the 6.33% 2035 gilts softened to 6.2233%, compared to 6.2302% in the last session.

Investor sentiment improved significantly after India and Pakistan agreed to a ceasefire, restoring calm after last week’s military tensions. This was followed by data showing India’s retail inflation eased to a near six-year low in April, reinforcing expectations of a dovish policy stance from the Reserve Bank of India.

Also, the RBI injected ₹500 billion of liquidity into the banking system through open market bond purchases, pushing the liquidity surplus to a seven-week high. 

A late-week recovery in US Treasury prices also aided local sentiment, making Indian debt more attractive on a relative basis.

Tenure	Today	Previous
10-year Gilt	6.22%	6.23%
5-year gilt	5.95%	5.96%
5-year OIS	5.66%	5.68%

The Indian rupee ended slightly higher on Friday, supported by a softening dollar index and lower crude oil prices, though it gave up early gains amid persistent trade concerns.

The domestic currency closed at 85.50 per dollar, up 5 paise from the previous close of 85.55. The rupee had opened 25 paise stronger, but intraday gains were capped by renewed concerns over India's external balance.

On a weekly basis, the rupee depreciated for the second straight week, ending down 0.16%. Currency movement remained volatile as investors tracked global developments and domestic macroeconomic indicators.

The dollar index, which measures the greenback against a basket of six major currencies, slipped 0.12% to 100.75, after US officials clarified they were not pursuing a weaker dollar through trade policies. This weighed on the greenback and provided modest support to emerging market currencies, including the rupee.

However, the upside in the rupee was limited by India’s widening trade deficit. According to April data, the merchandise trade gap surged to $26.42 billion, up sharply from $21.5 billion in March. While exports rose 9% year-on-year to $38.5 billion, imports jumped 19.1% to $64.91 billion, reflecting strong demand for energy and capital goods.

Unit	Today	Previous
Dollar/Rupee	85.50	85.55
Dollar Index	100.78	100.78
1-year Dollar/rupee premium (%)	2.14%	2.09%

OUTLOOK
Indian equity markets will likely witness range-bound movement next week. While the Nifty and Sensex logged close to 4% weekly gains, investors may turn selective ahead of upcoming global economic cues. Continued interest in midcaps and defence stocks will probably offer support, especially if institutional flows remain steady. However, valuation concerns and profit-taking could temper gains in large-cap segments, particularly in IT and banking.

Government bond yields are expected to remain soft, as traders anticipate continued RBI support through open market operations. The central bank’s bond purchase of ₹500 billion this week and another scheduled ₹250 billion operation on Monday will keep liquidity conditions flush, anchoring short-term yields. Additionally, with retail inflation easing to a near six-year low of 3.16%, expectations of a dovish policy stance will likely keep demand for gilts firm. The 10-year benchmark yield may continue to hover around 6.22–6.25% in the near term.

The Indian rupee may trade with a slight depreciation bias, weighed by a widening trade deficit, which touched $26.42 billion in April. Although softening crude prices and a weaker dollar index could lend temporary support, concerns over the external balance and global risk sentiment may cap upside.

Key Events & Data Due Monday:

Economic Data

• China April Industrial Production data
• Eurozone April CPI data

Corporate Actions

• Jan-Mar earnings: Aaron Industries, Alkali Metals, Bharat Electronics, Binani Industries, Borosil, DLF, DOMS Industries, Ecos (India) Mobility & Hospitality, Eris Lifesciences, Everest Industries, Geekay Wires, Globus Spirits, GMR Power and Urban Infra, Gujarat Gas, HEG, Hindustan Foods, Hindustan Media Ventures, Honda India Power Products, IG Petrochemicals, IRB Infrastructure Developers, JK Paper, Karur Vysya Bank, Kaveri Seed Company, KDDL, Marksans Pharma, Mold-Tek Packaging, Navneet Education, New India Assurance Company, NLC India, Northern Arc Capital, One Mobikwik Systems, Petronet LNG, Pfizer, PI Industries, Power Grid Corporation of India, Quess Corp, Redington, Sun Pharma Advanced Research Company, Zydus Wellness,
• Zydus Wellness to consider stock split

Policy Events

• US FOMC Member Williams speaks
• US FOMC Member Bostic speaks