Domestic market developments:

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·         Domestic benchmark equities ended lower today, as shares of oil marketing companies slipped on higher crude prices and weakening Rupee. Also, the overall investor sentiment remained negative a day before the expiry of June derivatives contracts. Energy stocks were among the biggest drags, with the Nifty Energy index closing 2.5% lower. Sensex and Nifty ended 0.77% and 0.91% lower respectively.
·         Government bond prices ended lower today as rise in crude oil prices heightened fear of RBI rate hike in August. Traders remained cautious of MSP announcement. However, hope of more RBI OMO purchases supported bonds. The yield on 10-year G-sec ended at 7.87% vs. yesterday’s close of 7.83%.
·         The Rupee weakened against the US Dollar,bringing it close to its all-time lows. The currency depreciated significantly, thereby breaching a technically important level of 68.50 against the U.S. Dollar, leading to a bout of weakness. The weakness in Indian Rupee is largely attributable to the depreciation in the Chinese yuan that has also set direction for other Asian currencies. The yuan has weakened as trade tensions between China and the U.S. have persisted. Higher oil prices over the last three trading sessions have also put pressure on the Indian currency. The Rupee ended at 68.63 vs. yesterday’s close of 68.25.
·         RBI injected liquidity to the tune of INR 327.36 mn (net) under LAF (including fixed and variable rate repos and reverse repos) as of June 26. It injected INR 23.93 bn under Special Refinance Facility.

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