PSU Banks, Midcaps Drag Markets Lower; Rupee Slips

HIGHLIGHTS

• Bank of Baroda shares slide 8% after NIM pressure dents earnings
• Govt may begin offloading minor stakes in five PSU banks via OFS in 2026-27
• YES Bank off highs on reports Japan's SMBC's still talks with SBI for stake acquisition
• Coforge shares rally 5% on strong March quarter earnings
• Ather Energy shares drop over 6% in stock market debut

Indian equities ended marginally lower on Tuesday, reversing Monday’s gains, as broad-based selling pressure weighed on investor sentiment. The decline was led by disappointing earnings, weak sectoral performance, and cautious management commentary, which collectively dampened market morale.

The Nifty 50 closed with a mild loss, but the broader market bore the brunt of the selling. The Nifty Midcap 100 index plunged 2.2%, indicating a pronounced risk-off mood among investors. This underperformance in the midcap space highlighted growing caution beyond blue-chip stocks.

Sectoral Performance
Banking stocks were at the center of the downturn. The Nifty Bank index dropped 648 points to end at 54,271, largely dragged down by a sharp fall in shares of Bank of Baroda after it reported weaker-than-expected quarterly results. The miss in earnings triggered a sell-off across public sector banks, pulling the entire PSU banking segment lower.

The market was broadly negative. Barring automobiles, all major sectoral indices closed in the red. The PSU Bank index was the worst performer, shedding nearly 5%, followed by the Realty index, which lost 3.5%. Other key sectors such as pharma, consumer durables, media, oil & gas, and power also witnessed declines in the range of 1% to 2.6%.

Top Gainers	% Change	Top Losers	% Change
NIFTY AUTO	0.17%	NIFTY PSU BANK	-4.84%
		NIFTY REALTY	-3.58%
		NIFTY OIL & GAS	-1.79%
		NIFTY CONSUMER DURABLES	-1.68%
		NIFTY MEDIA	-1.51%

Yields on Indian government bonds closed higher on Tuesday as traders booked profits after the benchmark 10-year yield briefly touched a key psychological support level. The 10-year gilts ended the session at 6.3508%, up from its previous close of 6.3247%, having touched a low of 6.32% in early trade.

The rise in Indian yields mirrored movements in global markets, particularly US Treasuries. The 10-year US Treasury yield climbed for a fifth consecutive session, reaching 4.35% during Asian hours, exerting upward pressure on Indian bonds.

Despite the uptick in yields, overall sentiment remained positive due to continued intervention by the Reserve Bank of India. On Tuesday, the central bank infused ₹500 billion into the system through bond purchases, supporting liquidity and helping stabilize market confidence. This action helped moderate a potentially steeper rise in yields.

Tenure	Today	Previous
10-year Gilt	6.35%	6.32%
5-year gilt	6.08%	6.06%
5-year OIS	5.62%	5.59%

The Indian rupee weakened on Tuesday, influenced by Asian currency trends and a dip in the offshore Chinese yuan. Market participants noted routine dollar demand from oil companies and importers as a key factor pressuring the rupee.

Despite this, the rupee found some support from falling global crude oil prices, which helped ease India’s import bill and current account concerns. Additionally, continued foreign portfolio inflows provided a cushion against a sharper depreciation.

However, investor sentiment remained cautious due to ongoing geopolitical tensions between India and Pakistan. 

Unit	Today	Previous
Dollar/Rupee	84.43	84.25
Dollar Index	99.74	99.64
1-year Dollar/rupee premium (%)	2.19%	2.25%

OUTLOOK
Indian equities may remain volatile, with midcaps and PSU banks facing strong selling pressure after disappointing earnings from Bank of Baroda. Investors are likely to focus on large-cap, defensive stocks amid prevailing uncertainty. 

Government bond yields are expected to move in a narrow range. The RBI’s ongoing bond purchases continue to inject liquidity and support sentiment. Market participants will closely watch whether the 10-year paper is included in the RBI's next round of purchases, which could further anchor yields.

The Indian rupee may face mild pressure due to continued dollar demand from oil importers and weakness in regional currencies. 

Key Events & Data Due Wednesday:

Economic Data

• US weekly crude oil inventories data

Corporate Actions

• Jan-Mar Earnings: APL Apollo Tubes, Bharat Seats, Blue Star, Coal India, Craftsman Automation, Dabur India, Goa Carbon, GTL, Hindustan Composites, Housing & Urban Development Corporation, Indus Infra Trust, Kamdhenu, Man Industries (India), Mangalore Chemicals & Fertilizers, MRF, Niva Bupa Health Insurance Company, Punjab National Bank, RattanIndia Power, Sapphire Foods India, Satin Creditcare Network, Sejal Glass, Shree Ram Proteins, Shriram Pistons & Rings, Somany Ceramics, Sonata Software, Symphony, Tata Chemicals, United Breweries, Voltas, Wonderla Holidays, 
• Goldiam International to consider fund raising
• Sah Polymers to consider fund raising

Policy Events

• US FOMC meeting outcome
• ECB Financial Stability Review  
• Reserve Bank of New Zealand Governor Orr speaks