Nifty Tops 25,200; Bond Yields Rise on RBI Liquidity Draining Step 

HIGHLIGHTS

• Reliance Infra shares hit 5% upper circuit on ₹6 billion export order from Germany
• Exicom Tele-Systems surges 18% after board approves ₹2.60 billion rights issue
• Adani Total Gas partners with Jio-bp to offer the other's fuel at select outlets
• Surya Roshni gain 7% on wining orders worth over ₹750 million from Gujarat Gas
• Adani, Vedanta, Dalmia among bidders for Jaiprakash Associates as bid deadline closes

Indian equities ended higher on Wednesday, lifted by broad-based buying in large-cap stocks and a strong showing by Reliance Industries, which surged on earnings optimism. Sentiment was buoyed by easing geopolitical tensions, with the ceasefire between Israel and Iran sparking a global risk-on mood across equity markets.

The NIFTY 50 climbed 0.8% to close at 25,244.75, while the BSE Sensex advanced 0.85% to 82,755.51—both logging their best closes in over eight months.

Market confidence improved as global equities rallied after both Iran and Israel signalled de-escalation. The MSCI World Index hit a record high, and Asian markets gained across the board.

Sectoral Performance
Large-cap sectors such as IT and auto led the gains, with the NIFTY IT index up 1.6%. INFOSYS rose 2.1%, tracking the tech-led rebound seen in global peers. Autos also performed well on stable input costs and improving demand sentiment.

Reliance industries added to the momentum, supported by positive expectations ahead of quarterly results. Broader participation remained healthy though midcaps lagged slightly after recent volatility.

Among notable movers, Multi Commodity Exchange rose 5.4% after UBS reaffirmed its "buy" rating and revised the price target upward, citing sustained volume growth and favourable structural trends.

Top Gainers	% Change	Top Losers	% Change
NIFTY MEDIA	1.99%	NIFTY PRIVATE BANK	-0.03%
NIFTY IT	1.64%
NIFTY CONSUMER DURABLES	1.43%
NIFTY AUTO	0.97%
NIFTY HEALTHCARE INDEX	0.94%

Indian government bond yields rose on Wednesday, driven by an increase in short-term rates after the Reserve Bank of India announced a major liquidity absorption measure. The RBI will conduct a ₹1 trillion 7-day Variable Rate Reverse Repo auction on Friday to drain excess liquidity from the banking system.

The yield on the benchmark 10-year gilts closed at 6.2873%, up from 6.2504% the previous day. The five-year 6.75% 2029 bond also saw a jump in yields, ending at 6.0264% versus 5.9870% on Tuesday.

The decision comes amid persistent surplus liquidity conditions. Despite recent tax outflows, the banking system’s liquidity surplus has averaged ₹2.76 trillion daily in June, well above the RBI's comfort threshold of 1% of net demand and time liabilities. This surplus had previously kept short-term rates depressed, prompting the RBI to step in.

Earlier this month, a Reuters report indicated that the RBI was keen to ensure that the call money rate remains closer to the repo rate, its main policy tool. The central bank has also sought market feedback on potentially revising the liquidity management framework.

Wednesday’s yield uptick was particularly pronounced in the short end of the curve, with traders now expecting money market rates to edge higher in coming sessions as the central bank reasserts its control over liquidity and signalling.

Tenure	Today	Previous
10-year Gilt	6.29%	6.25%
5-year gilt	6.03%	5.99%
5-year OIS	5.69%	5.68%

The Indian rupee ended slightly weaker on Wednesday, pressured by month-end dollar demand from importers even as stronger equities and improved global sentiment offered partial support. The local currency closed at 86.0775 per US dollar, marginally lower than its previous close of 85.9750.

The rupee had strengthened early in the session, touching a high of 85.8075, but later gave up gains amid sustained corporate dollar buying, particularly from oil importers. A mild pullback in the offshore Chinese yuan also weighed on the rupee’s performance.

While the fragile ceasefire between Israel and Iran helped stabilise global risk sentiment, its sustainability remained uncertain. US President Donald Trump said the truce was “going well,” but lingering geopolitical risks kept traders cautious. Most Asian equity markets logged gains, reflecting a temporary return of risk appetite.

The dollar index edged higher to 98.1, while Brent crude oil rose around 1% to $67.8 per barrel, adding to concerns over India’s import bill. India relies heavily on crude imports, and any upward pressure on prices tends to weaken the rupee.

Forward premiums moved slightly higher after the Reserve Bank of India announced steps to withdraw excess liquidity from the banking system. This lifted near-term forwards, with some spillover into longer tenors.

Unit	Today	Previous
Dollar/Rupee	86.08	85.98
Dollar Index	97.65	97.45
1-year Dollar/rupee premium (%)	1.97%	1.91%

OUTLOOK
Equities are expected to face some consolidation after recent gains, particularly if global cues turn adverse or if oil prices rebound. However, continued strength in large-cap names, particularly in IT and financials, may lend support. The Nifty 50 may hover around the 25,000 mark, while mid- and small-cap segments could witness selective profit-booking.

In the bond market, government securities are likely to face upward pressure on yields in the short term. The Reserve Bank of India’s decision to conduct a ₹1 trillion Variable Rate Reverse Repo auction signals an intent to manage surplus liquidity, which could lift short-end money market rates. Traders will monitor Friday’s operation for clarity on the central bank’s future stance. The benchmark 10-year yield may remain range-bound between 6.25% and 6.33%, influenced by both domestic liquidity measures and evolving global risk sentiment.

The Indian rupee may continue to trade in a narrow band, but with a weakening bias. Month-end dollar demand from importers and global risk aversion could limit its appreciation. While easing oil prices offer some relief, the rupee is unlikely to see sustained gains unless geopolitical calm holds. Any resurgence in hostilities or dollar strength could push the currency back towards the 86.50–87.00 zone, even as portfolio inflows from upcoming IPOs may provide near-term support.

Key Events & Data Due Thursday:
Economic Data

• Germnay GfK July Consumer Climate index
• US Jan-Mar Core PCE Prices
• US May durable goods orders
• US Jan-Mar GDP
• US initial jobless claims

Corporate Actions

• Alps Industries to consider financial results
• Hindustan Aeronautics to consider dividend
• Satin Creditcare Network  to consider fund raising
• W S Industries (I) to consider fund raising

Policy Events

• ECB's De Guindos Speaks  
• EU Leaders Summit  
• BoE Gov Bailey Speaks  
• ECB's Schnabel Speaks  
• ECB President Lagarde Speaks