Indian Rupee
The Indian rupee opened stronger at 85.3150 against the U.S. dollar on Friday, compared to its previous close of 85.3325 on Thursday. The Indian rupee strengthened on Friday due to a weakening U.S. dollar, which followed softer U.S. economic data, increasing expectations for Federal Reserve rate cuts later in the year. Although the rupee received a temporary lift from the India-Pakistan truce, it has underperformed its regional counterparts for the week. A trader in Mumbai noted that the demand for U.S. dollars has shifted the near-term outlook for the rupee from positive to neutral. The dollar index declined after U.S. retail sales control group fell by 0.2% month-over-month and factory output decreased by 0.4% in April. Additionally, the producer price index (PPI) inflation dropped by 0.5%, bolstering the possibility of at least two Federal Reserve rate cuts in 2024, which also led to a decrease in U.S. Treasury yields.

Indian Equities
Following significant gains yesterday, Indian stock markets opened cautiously today. The Nifty 50 started at 25,064.65, and the Sensex at 82,392.63, both below previous closing levels. However, GIFT Nifty indicates likely further gains, potentially opening the Nifty 50 around 25,150. Yesterday's trading featured a sharp afternoon recovery for the Nifty, surpassing 25,000. Today, focus will be on stocks like IndusInd Bank and Bharti Airtel (amid a possible block deal), earnings reactions from companies like Balrampur Chini and Abbott India, and results from Hyundai Motor India, BHEL, and Delhivery. Stay tuned for live updates.

Major gainers on Nifty were BEL, Eicher Motor, Eternal, Tata Motors while major losers included Bharti Airtel, Indusind Bank, HCL Tech, Infosys.

Indian Government Bonds
Despite SEBI's plan to ease FPI regulations, the shrinking gap between Indian and U.S. bond yields could deter near-term investment in Indian bonds. Experts note FPI decisions hinge on macro factors, not just rules. Narrower yield spreads usually push investors to their home markets for better returns after accounting for costs. Following RBI rate cuts, the India-U.S. yield gap has decreased, slowing FPI investment in accessible Indian bonds. Currency volatility also discourages investment. While SEBI's simpler rules for government bond FPIs are intended to help, the tight yield spread and currency fluctuations might limit immediate investment increases.         

The 10-year benchmark bond yield was trading at 6.320%