Nifty holds 23,400 amid RBI policy caution; broader market ends firm

The benchmark indices ended marginally higher on Thursday after a volatile session marked by sharp swings on weekly Sensex F&O expiry. Sentiment remained cautious amid geopolitical tensions in the Middle East and continued foreign institutional investor (FII) selling. However, reports that the government may remove taxes on foreign portfolio investments in government securities provided support to the market.

Investors also stayed on the sidelines ahead of the Reserve Bank of India's monetary policy decision on 5 June 2026. Market participants are awaiting the central bank's guidance on interest rates, inflation, growth and liquidity.

Despite the choppy trade, broader markets outperformed. Mid-cap and small-cap stocks witnessed steady buying, while consumer durables and PSU bank shares helped the Nifty close above the 23,400 mark.

The S&P BSE Sensex rose 13.84 points or 0.02% to 74,360.01. The Nifty 50 index added 10.95 points or 0.05% to 23,416.55.

Titan Company (up 3.48%), Eternal (up 2.98%) and ICICI Bank (up 0.78%) supported the Nifty today.

The broader market outperformed the frontline indices. The BSE 150 MidCap Index rose 0.46% and the BSE 250 SmallCap Index rallied 0.60%.

The market breadth was positive. On the BSE, 2,244 shares rose and 1,940 shares fell. A total of 182 shares were unchanged.

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, declined 2.41% to 15.89.

Media reports suggested that the government may scrap capital gains tax on foreign portfolio investors' (FPIs) investments in government securities. According to media reports, the proposal has received Cabinet approval and could be implemented through an ordinance. Foreign investors currently pay a 12.5% long-term capital gains tax on listed bonds held for more than 12 months and may also be subject to a 20% withholding tax on interest income. The proposed tax relief is aimed at attracting overseas capital into India's debt market, supporting the rupee and enhancing the appeal of Indian government bonds at a time of heightened global uncertainty and foreign equity outflows.

Monsoon Update:

The southwest monsoon reached Kerala on Thursday, three days later than its normal onset date of 1 June. The June-September monsoon is crucial for India's nearly $4 trillion economy, providing about 70% of the rainfall needed for agriculture and water reservoirs. The rains typically spread across the country by mid-July, enabling the sowing of key crops such as rice, corn, cotton, soybeans and sugarcane. However, concerns remain after the India Meteorological Department forecast that an El Nino-affected monsoon in 2026 could result in the weakest rainfall in 11 years, potentially impacting crop output, food inflation and economic growth.

Indian Economy:

The Union Cabinet on 3 June 2026 approved a one-time budgetary support of up to Rs 10,000 crore for oil marketing companies to stabilise Aviation Turbine Fuel (ATF) prices for scheduled Indian airlines. The assistance will be provided as interest-free advances through the Ministry of Petroleum and Natural Gas and will support both domestic and international flight operations. The move comes after a sharp surge in ATF prices during the West Asia crisis, with rates rising from Rs 60.5 per litre in March 2026 to Rs 142 per litre in May 2026. Under the new arrangement, domestic ATF prices will be capped at Rs 75.6 per litre through a self-sustaining revolving fund mechanism for 36 months. A monitoring committee comprising officials from the Ministry of Civil Aviation, the Ministry of Petroleum and Natural Gas, and the Department of Expenditure will oversee the implementation of the scheme.

The United States on 3 June 2026 proposed additional tariffs on imports from 60 economies, including India, under Section 301 investigations into alleged failures to prevent trade in goods linked to forced labour. India could face a 12.5% additional tariff, while countries such as Canada, Mexico, Indonesia, Pakistan, Ecuador and the European Union may face a 10% levy. The U.S. Trade Representative claims some countries import forced labour-linked inputs and export finished products to the U.S., with India identified across sectors including aluminium, cotton, cocoa, fish, coffee, nickel, palm oil and rice. India has rejected the allegations and is pursuing bilateral discussions. The proposal remains under public consultation, with hearings scheduled for 7 July 2026, before any final decision is made.

Numbers to Track:

The yield on India's 10-year benchmark federal paper shed 0.30% to 7.005 compared with previous session close of 7.026.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 95.8350 compared with its close of 95.7600 during the previous trading session.

MCX Gold futures for 6 August 2026 settlement rose 0.47% to Rs 159,270.

The US Dollar Index (DXY), which tracks the greenback's value against a basket of currencies, was down 0.21% to 99.29.

The United States 10-year bond yield declined 0.38% to 4.477.

In the commodities market, Brent crude for July 2026 settlement lost $1.11 or 1.13% to $96.70 a barrel.

Global Markets:

U.S. Dow Jones futures rose 178 points, indicating a positive start for Wall Street later in the day.

European shares traded higher on Thursday after Israel and Lebanon agreed to a ceasefire on Wednesday, easing concerns over regional tensions.

Asian shares ended lower, tracking overnight losses on Wall Street. Investor sentiment remained fragile as tensions between the U.S. and Iran kept oil prices elevated, raising concerns about inflation and energy costs.

Iran reportedly struck Kuwait International Airport early Wednesday. The attack came a day after U.S. Central Command said it had intercepted multiple Iranian ballistic missiles and drones and carried out self-defence strikes on Qeshm Island in the Persian Gulf.

Meanwhile, Israeli Prime Minister Benjamin Netanyahu reportedly said that Israel and the U.S. remain prepared to launch further strikes on Iran if required.

On Wall Street, stocks closed sharply lower on Wednesday. The S&P 500 snapped a nine-session winning streak as rising oil prices and Treasury yields heightened concerns that the U.S.-Iran conflict could fuel inflation.

The Dow Jones Industrial Average fell 620.72 points, or 1.21%, to 50,687.07. The S&P 500 declined 0.74% to 7,553.68, while the Nasdaq Composite dropped 0.89% to 26,853.98.

Stocks in Spotlight:

Rajesh Exports was locked in 5% lower circuit after the Securities and Exchange Board of India (SEBI) barred its promoter Rajesh Mehta from accessing the securities market over allegations of financial misappropriation.

The interim order stems from an investigation initiated following a shareholder complaint concerning the company?s financial reporting practices. SEBI appointed an investigating authority in October 2024 and subsequently engaged forensic auditor BDO to conduct an independent review of the company?s books and records.

According to SEBI?s preliminary observations, overseas subsidiaries, particularly the company?s Swiss refining subsidiary Valcambi, accounted for approximately 97?99% of consolidated revenue during the review period. The regulator further stated that it was unable to independently verify the company?s reported investment of Rs 1,035 crore in African gold-mining assets.

The proceedings remain ongoing, and Rajesh Exports will have an opportunity to present its response before SEBI reaches a final conclusion.

Hero MotoCorp rose 0.85%. The company unveiled its first flex-fuel motorcycles, the Splendor+ Flex Fuel and HF Deluxe Flex Fuel. The HF Deluxe Flex Fuel is priced at Rs 72,792 (ex-showroom Delhi), while the Splendor+ Flex Fuel is priced at Rs 82,710 (ex-showroom Delhi). The company plans to introduce the flex-fuel models in Delhi and select regions of Maharashtra in July 2026, followed by a nationwide rollout.

ideaForge Technology hit an upper limit of 5% after the drone manufacturer announced plans to raise up to Rs 500 crore through various capital market instruments.

PhysicsWallah surged 15.64% after the edtech company revised its student lending strategy. The company said it will partner with multiple regulated non-banking financial companies (NBFCs) to provide education loans to students. The move comes shortly after PhysicsWallah announced an investment of around Rs 120 crore in its wholly owned subsidiary, FinZ Finance.

In an exchange filing, the company said it is moving away from its earlier plan of undertaking lending activities directly. The revised approach is expected to reduce balance-sheet and credit risks.

Vibhor Steel Tubes added 1.45% after the company?s board approved the incorporation of wholly-owned subsidiary, Viyom Steel Infra in Hisar, Haryana. The proposed wholly owned subsidiary shall carry on the business of specialized manufacturer of high-quality steel products for infrastructure sector.

The company will subscribe to the entire initial paid-up share capital of Rs 10 lakh in the subsidiary, with shares being issued at par value. The company will hold 100% ownership and retain full management control over the subsidiary.

Jain Irrigation Sytems surged 6.58% after the company announced the commissioning of a high-tech industrial-scale biochar facility with an annual production capacity of around 20,000 tonnes in Jalgaon, Maharashtra.

Agarwal Industrial Corporation surged 20% to Rs 503.55 after the company announced that it has secured a major supply contract worth approximately Rs 477.5 crore from Hindustan Petroleum Corporation Limited (HPCL).

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