Equities Struggle, Rupee Faces Tariff Heat as Bonds Eye Borrowing Plan

HIGHLIGHTS

• Cabinet approves Rs 69,725-crore plan for shipbuilding, maritime development
  
• India considering to increase foreign holdings in PSU banks
  
• IT stocks extend slide as US proposes to change H-1B visa process
  
• Auto part maker Minda Corp soars on plans to target 3.5x revenue growth

Indian equities extended their losing run for a fourth straight session on September 24, with benchmark indices dragged lower by widespread selling across sectors, barring FMCG. The Nifty 50 slipped below the 24,100 mark and closed near the day’s low, reflecting weak global sentiment and cautious commentary from the US Federal Reserve.

Auto and IT stocks were among the heaviest drags, with Tata Motors, Wipro, Bharat Electronics, Jio Financial Services, and Hero MotoCorp leading the list of Nifty losers. In contrast, FMCG counters such as Hindustan Unilever and Nestle offered some support, alongside NTPC, JSW Steel, and Power Grid. 

Sectoral performance
Sectoral performance remained broadly negative as auto, IT, media, metal, oil & gas, and realty indices fell between 0.5% and 2%. The defensive tilt towards FMCG highlighted the market’s cautious undertone as investors trimmed exposure to cyclical sectors.

 In individual action, Bajaj Electricals gained after announcing the acquisition of the ‘Morphy Richards’ brand, a move seen as strengthening its consumer durables portfolio. Swiggy slipped 2% following news of a partial stake sale in Rapido and restructuring of its quick commerce arm Instamart. Refex Power rose nearly 2% after securing a ₹475 crore order, underscoring selective stock-specific optimism despite broad weakness.

Top Gainers	% Change	Top Losers	% Change
NIFTY FMCG	0.18%	NIFTY REALTY	-2.49%
		NIFTY AUTO	-1.15%
		NIFTY PRIVATE BANK	-0.86%
		NIFTY MEDIA	-0.81%
		NIFTY IT	-0.72%

Indian government bonds closed weaker on Wednesday after a choppy session, as traders weighed expectations of a near-term rate cut against uncertainty over upcoming borrowing announcements. The 10-year gilts benchmark yield settled at 6.4908%, compared with 6.4729% in the previous session, snapping early gains.

The Reserve Bank of India is set to announce its monetary policy on October 1, and speculation around a rate cut kept sentiment mixed. Both Capital Economics and Barclays anticipate a reduction, while State Bank of India, the country’s largest lender, has also urged the central bank to ease rates. Still, investors stayed cautious given the looming release of the fiscal second-half borrowing calendar, which will set the tone for supply dynamics in government securities.

Market participants remain wary that an extended supply of long-dated paper could strain demand, particularly as the spread between short- and ultra-long maturities has widened in recent months. Traders are also awaiting the quarterly borrowing plan of states, due at month-end, which could further influence yields.

Ahead of the RBI decision, focus will shift to Friday’s auction, where the government plans to issue ₹160 billion each of 15- and 40-year bonds, marking the final sale of the fiscal first half.

Tenure	Today	Previous
10-year Gilt	6.49%	6.47%
5-year gilt	6.17%	6.13%
5-year OIS	5.73%	5.72%

The Indian rupee ended almost unchanged on Wednesday, with likely intervention by the Reserve Bank of India cushioning the local unit against renewed pressure from steep US tariffs and the recent hike in H-1B visa fees. The currency closed at 88.69 per dollar, only slightly above its record low of 88.7975 touched a day earlier.

According to traders, the RBI was active across multiple segments, including non-deliverable forwards, currency futures, and the spot market, to smooth volatility and prevent a sharper decline. Despite subdued dollar demand compared to earlier this week, market participants noted that the rupee’s near-term trajectory remains biased toward further weakness.

Reports earlier this month indicated that the central bank has been more visible in the offshore NDF market, signaling its determination to contain sharp moves. However, pressures persist from seasonal gold-related dollar demand and lingering concerns that higher U.S. visa fees could erode remittance inflows and IT-sector competitiveness.

Globally, the dollar index rose 0.3% to 97.6, weighing on most Asian currencies, including the rupee. Domestic bond yields edged higher, with the 10-year benchmark closing at 6.486%, reflecting cautious sentiment as investors positioned ahead of the RBI’s upcoming policy review. 

Unit	Today	Previous
Dollar/Rupee	88.69	88.76
Dollar Index	97.67	97.30
1-year Dollar/rupee premium (%)	2.35%	2.34%

OUTLOOK
Benchmark equity indices are expected to trade with a negative bias, as recent sessions have seen broad-based selling across sectors, with auto, IT, and metals leading losses. FMCG may continue to attract defensive buying, but overall sentiment will stay fragile given weak global cues and cautious commentary from the US Federal Reserve. Stock-specific moves, such as Bajaj Electricals’ acquisition-driven rally and gains in Refex Power, will provide selective opportunities, though broader participation is likely to remain muted. Analysts anticipate further consolidation unless global risk appetite improves.

The government bond market will trade in a narrow range ahead of the Reserve Bank of India’s October 1 policy decision and the release of the fiscal second-half borrowing calendar. Traders will stay watchful of fresh supply, particularly in longer-tenor papers, while also pricing in the possibility of a rate cut later this year. Elevated inflation readings and supply-demand mismatches, however, may restrict gains, with the 10-year benchmark yield expected to hover near 6.48–6.52%.

The Indian rupee will likely remain under downward pressure despite recent RBI intervention. Concerns over steep US tariffs and higher H-1B visa fees will keep the outlook fragile, particularly with persistent portfolio outflows. Dollar demand from importers and gold-related purchases will further weigh on the local unit. While Fed rate-cut expectations may offer short-term relief, the rupee’s bias will remain tilted toward weakness unless trade tensions ease or foreign inflows resume.