Morning Session – Indian Financial Market (05 Jun 2026)

Indian Rupee
The Indian rupee opened at 95.7125 against the U.S. dollar on Friday, compared to its previous close of 95.7850 on Thursday. The Indian rupee rose to approximately 95.6 per dollar as traders adjusted positions in anticipation of the Reserve Bank of India policy decision. While the central bank is broadly expected to maintain its benchmark rate at 5.25 percent, market participants are divided on the potential for an unexpected rate hike due to inflation pressures from high oil prices and a weaker currency. Investors are also monitoring the RBI for measures to bolster dollar inflows and address concerns regarding the current account deficit. Despite a growing market consensus that the bank may adopt a more hawkish stance in the future, the rupee's gains remain constrained by geopolitical tensions in the Middle East and a wider downturn across Asian currencies.

Indian Equities
Indian stock market showed positive momentum with the BSE Sensex trading 175 points higher and the Nifty index climbing above 23,450, supported by gains in Bajaj Finance and Tech Mahindra despite mixed global cues following a dip in US tech stocks. While midcap and smallcap indices also saw gains, sectoral performance remained varied, with selling pressure in telecommunications and metal stocks offset by buying in the banking and realty sectors. Notable corporate developments included CG Power launching a new manufacturing facility to expand its grid capacity, several housing finance firms raising substantial debt through bond issuances, and a partnership between Vodafone Idea and Meta to implement new silent mobile verification technology for enhanced security.

Indian Government Bonds
India plans to eliminate capital gains tax for foreign portfolio investors on government securities to attract international capital and stabilize the rupee amid recent economic pressures. According to a confidential source, the government also intends to remove the 20% withholding tax on interest earned from these bonds, aligning the country closer to global investment standards. While analysts suggest this move will likely provide only a marginal boost in the near term rather than acting as an immediate economic remedy, it serves as a strategic effort to improve foreign inflows into the debt market following significant outflows from Indian equities this year.

The 10-year benchmark bond yield was trading at 7.013%.