Tariff Pause Lifts Markets; Pharma, Metals Gain, Rupee Strengthens

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• Muthoot Finance tumbles 6% as RBI’s draft gold loan norms spark volatility
• Aurionpro Solutions jump over 15% on acquiring complete stake in Fintra Software
• VIP Clothing shares rally on partnership with Zepto

Indian equity markets witnessed a sharp rebound today, as benchmark indices rallied nearly 2% following a 90-day pause on reciprocal tariffs announced by US President Donald Trump for all countries except China. This move brought relief to global markets and triggered across-the-board buying on Dalal Street after a holiday-induced break.

However, caution remains. China announced it would retaliate with additional tariffs on the US goods from April 12, taking the total duty to 125%, in response to the US raising tariffs on Chinese imports to 145%. 

SECTORAL PERFORMANCE 
Sectoral performance was robust, with all major indices ending in the green. The metal index surged 4%, buoyed by easing global trade concerns. Auto, oil & gas, power, psu, telecom, and pharma indices gained around 2% each. In a positive sign for broader market participation, the BSE Midcap index rose 1.8% and the Smallcap index jumped 3%, indicating renewed investor appetite for mid- and small-sized companies.

Top Gainers	% Change
NIFTY METAL	4.1%
NIFTY CONSUMER DURABLES	3.2%
NIFTY PHARMA	2.4%
NIFTY OIL & GAS	2.2%
NIFTY AUTO	2.0%

Indian government bond yields extended their downward trend for a fourth straight week, with the shorter-end of the curve leading the decline, following the Reserve Bank of India’s dovish policy stance and liquidity guidance. Despite an uptick in US Treasury yields, the domestic market remained buoyed by strong central bank signals.
The benchmark 10-year government bond yield eased by 2 basis points for the week, while the five-year bond yield dropped by a sharper 8 basis points, reflecting greater investor interest in shorter-duration papers.
On April 9, the RBI cut its key repo rate by 25 basis points to 6%, marking its second consecutive rate cut in 2025. It also shifted its policy stance from "neutral" to "accommodative", indicating the possibility of further rate reductions in the coming months to support growth amid global uncertainties.
Adding to the momentum, Governor Sanjay Malhotra stated that the RBI intends to maintain a liquidity surplus of nearly 1% of total deposits, a move that has further boosted demand for shorter-tenure bonds. Investors typically favour short-term government securities when surplus liquidity is expected, as these instruments are less sensitive to interest rate volatility.

Tenure	Today	Previous
10-year Gilt	6.45%	6.44%
5-year gilt	6.23%	6.26%
5-year OIS	5.71%	5.75%

The Indian rupee strengthened sharply today, buoyed by a broad decline in the US dollar and easing global crude oil prices. The rupee closed at 86.05 against the US dollar, appreciating 65 paise from its previous close of 86.70—a four-week low hit on Wednesday. Indian markets were closed on Thursday due to Mahavir Jayanti, but positive global cues helped the domestic currency rebound on reopening.
The surge in the Indian unit came as the dollar index dropped below the psychological 100-mark, falling to 99.01, its lowest since April 2023, after posting its steepest single-day drop on Thursday. Traders pulled out capital from US assets, reacting to intensifying tariff tensions with China. Beijing's decision to hike tariffs on US goods to 125%, in response to Washington’s elevated duties, worsened sentiment.
Additionally, crude oil futures hovered near a four-year low, easing India's import bill and reducing pressure on the rupee. 

Unit	Today	Previous
Dollar/Rupee	86.05	86.71
Dollar Index	99.51	102.70
1-year Dollar/rupee premium (%)	2.30%	2.30%

OUTLOOK
Looking ahead, global developments, particularly trade relations between the US and China, will continue to steer investor sentiment in Indian equities, even as domestic fundamentals remain relatively resilient.
With external pressure easing and favorable energy prices, the rupee may see further near-term stability, though ongoing geopolitical and trade developments will remain key to its outlook.
The gilts yield, particularly at the shorter end, is expected to remain under downward pressure, as market participants anticipate continued support from the RBI’s accommodative policy approach and proactive liquidity management.
The market will remain shut on Monday, April 14 on account of Dr. BabaSaheb Ambedkar Jayanti.

Key Events & Data Due Tuesday
Economic Data:
Japan February Industrial Production Data
OPEC Monthly Report  
IndIa March CPI Data
India March WPI Inflation Data
India March trade data
US April NY Empire State Manufacturing Index 

Corporate Actions:
ICICI Prudential Life Insurance Company to consider earnings
Indian Renewable Energy Development Agency to consider earnings
GM Breweries to consider earnings
ICICI Lombard General Insurance Company to consider earnings
Max India to consider earnings

Policy:
US Fed Waller speaks  
US FOMC Member Harker Speaks  
US FOMC Member Bostic Speaks