Markets Daily India

Bond Selloff Points to Rate-Hike Jolt for Indian Equities Ahead

Modi’s call to curb fuel use suggests an imminent hike in pump prices, adding to inflationary pressure.

A Hindustan Petroleum gas station in Mumbai.Photographer: Dhiraj Singh/Bloomberg

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By Savio Shetty and Pratigya Vajpayee

May 12, 2026 at 2:43 AM UTC

This article is for subscribers only.

Good morning...

I’m Savio Shetty in Mumbai, bringing you the latest on markets.

Risk sentiment has weakened after President Donald Trump cast doubt on the Iran ceasefire, raising fears of a prolonged Strait of Hormuz closure and driving oil prices higher. That’s bad news for India, where the economic strain from elevated energy prices is intensifying by the day. The benchmark Nifty 50 slumped the most in six weeks on Monday, while the rupee plunged to a record low close as Prime Minister Narendra Modi’s call for belt-tightening to support the exchange rate only deepened concerns. Bonds also weakened, stoking fears of tighter monetary policy, amid indications that retail fuel prices could be raised modestly within days. Against this backdrop, Tuesday’s April inflation data takes on added significance. On the earnings front, key results due include Tata Power and Dr. Reddy’s Laboratories.

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But first, a look at the warning signal flashing from the bond market.