HIGHLIGHTS

• SC dismisses Vodafone Idea's plea for waiver of AGR dues; telco's shares tumble 9%
• India plans stricter rules for companies with foreign ownership
• HFCL shares jump 3% as govt announces notification for 6G services
• ED arrests former UCO Bank CMD Goel on money laundering charges
• Six officials of IndusInd Bank under investigation for insider trading

Indian equities ended lower on Tuesday as benchmark indices faced pressure from key heavyweight stocks, with the Sensex falling over 250 points and the Nifty closing below the 25,000 mark. The weakness was largely attributed to broad-based selling in technology and financial names, as well as profit-booking in recent outperformers like defence stocks.

The decline in frontline indices came despite continued strength in the broader market, as midcap and smallcap indices outperformed, supported by sustained investor interest. This divergence highlights a shift in market participation toward mid- and small-cap segments amid valuation concerns in large-cap stocks.

Sectoral Performance
Technology and banking stocks led the decline, with major index constituents such as Infosys, TCS, and ICICI Bank finishing among the top Nifty losers. Heavyweight Reliance Industries also contributed significantly to the day’s losses, dragging the broader indices lower.

In the defence space, which has rallied in recent sessions, investors opted to lock in gains. Profit-taking dragged down shares of key players by up to 6%, marking a temporary pause in the sector’s uptrend.

Top Gainers	% Change	Top Losers	% Change
NIFTY REALTY	2.26%	NIFTY IT	-1.30%
NIFTY PSU BANK	1.46%	NIFTY MEDIA	-0.59%
NIFTY PHARMA	0.50%	NIFTY OIL & GAS	-0.36%
NIFTY AUTO	0.42%	NIFTY FMCG	-0.19%
NIFTY HEALTHCARE INDEX	0.38%	NIFTY PRIVATE BANK	-0.11%

Indian government bond yields held steady on Monday as traders paused for consolidation after last week’s steep rally, driven by the Reserve Bank of India’s bond purchases and softer inflation data.

The yield on the new 10-year benchmark gilts maturing in 2035 closed at 6.2382%, marginally higher than 6.2233% in the previous session. 

Last week, bond yields had declined sharply following the RBI’s open market bond purchases, which injected significant liquidity into the banking system. Adding to the bullish sentiment was the April retail inflation print of 3.16%, marking the third straight month below the central bank’s medium-term target of 4%.

This persistent moderation in price pressures has strengthened expectations that the Monetary Policy Committee may announce another 25 basis-point rate cut in its upcoming policy review on June 6. If implemented, it would mark the third consecutive cut, reinforcing a dovish monetary stance aimed at supporting growth.

Meanwhile, market participants are keenly awaiting the RBI’s dividend transfer to the government, expected to be announced shortly. The payout is seen as a key near-term trigger for bond markets. Economists, including those at Citi, forecast that the central bank could transfer a record surplus, significantly higher than last year’s ₹2.1 trillion.

Tenure	Today	Previous
10-year Gilt	6.24%	6.22%
5-year gilt	5.94%	5.95%
5-year OIS	5.71%	5.66%

The Indian Rupee strengthened against the US dollar on Monday, aided by a decline in the greenback following US sovereign credit downgrade by Moody’s.

The rupee closed at 85.40 per dollar, appreciating by 10 paise from its previous close of 85.52 on Friday, as per Bloomberg data. The gain marked a positive start to the week for the domestic currency, reversing recent weakness.

The move came after Moody’s Investors Service downgraded the United States’ long-term credit rating from AAA to AA1, raising alarm over the country’s growing fiscal deficit and debt burden—concerns intensified under President Donald Trump’s tax policies. The downgrade prompted global investors to reassess their dollar holdings, weakening the US currency across markets.

However, the impact of the downgrade was played down by US Treasury Secretary Scott Bessent, who referred to Moody’s as a “lagging indicator,” reflecting broader skepticism around rating agencies’ timeliness.

The dollar index—which tracks the greenback against six major currencies—slipped, providing a boost to emerging market currencies, including the rupee. 
 

Unit	Today	Previous
Dollar/Rupee	85.40	85.50
Dollar Index	99.98	100.95
1-year Dollar/rupee premium (%)	2.08%	2.14%

OUTLOOK

Equity markets may open cautiously on Tuesday following weakness in large-cap stocks and profit-taking in IT and financial sectors. 

On the fixed income front, government bond yields are likely to remain steady after last week's sharp decline, with traders expected to consolidate positions. The benchmark 10-year gilt yield may hover around 6.23%–6.24% in the near term, as the market awaits cues from the RBI’s surplus transfer to the government

The Indian Rupee may trade with a slight positive bias following a modest recovery against the US dollar on Monday. Weakness in the dollar index—after the US sovereign downgrade by Moody’s—and falling crude oil prices could lend near-term support.

However, a widening trade deficit and continued foreign portfolio outflows may cap any sharp appreciation. Overall, the rupee is expected to remain range-bound with an upward tilt, barring any sudden global risk-off moves.

Key Events & Data Due Tuesday:
Economic Data

• Germany  April PPI

Corporate Actions

• Jan-Mar earnings: Aaron Industries, Alkali Metals, Bharat Electronics, Bharat Wire Ropes, Binani Industries, Borosil, CARYSIL, CMS Info Systems, Diamines & Chemicals, DLF, DOMS Industries, Ecos (India) Mobility & Hospitality, Everest Industries, Globus Spirits, GMR Power and Urban Infra, Gujarat Gas, HEG, Hindustan Foods, Hindustan Media Ventures, HLE Glascoat, Honda India Power Products, IG Petrochemicals, IRB Infrastructure Developers, Jayshree Tea & Industries, JK Paper, Jupiter Wagons, Karur Vysya Bank, Kaveri Seed Company, KDDL, Marksans Pharma, Navneet Education, NLC India, Northern Arc Capital, Petronet LNG, Pfizer, Power Grid Corporation of India, Redington, Repro India, Sun Pharma Advanced Research Company, The New India Assurance Company, The Peria Karamalai Tea & Produce Company, Zydus Wellness, 
• Zydus Wellness to consider stock split

Policy Events

• RBA Interest Rate Decision
• BoE MPC Member Pill Speaks  
• German Buba Vice President Buch Speak
• US FOMC Member Bostic Speaks  
• PBoC Loan Prime Rate