Eqwires | Stock Market Advisory

The Securities and Exchange Board of India (SEBI) is expected to issue its much-anticipated circular today, bringing clarity on the new expiry day framework for equity derivatives across stock exchanges. This marks the conclusion of a consultation process that began in March 2025, aimed at streamlining contract expiries and curbing excessive market volatility.

As first reported by CNBC-TV18 on May 22, SEBI had proposed limiting equity derivatives contract expiries to just two days in a week—either Tuesday or Thursday. This move comes in response to growing concerns about speculative trading, which had been amplified by multiple expiry days throughout the week.

To help finalize the new framework, stock exchanges were asked to submit their preferred expiry day by June 15, 2025. According to sources familiar with the matter, the National Stock Exchange (NSE) has opted for Tuesday.

With the final circular expected today, the market is closely watching for official confirmation. Traders and investors are preparing to adjust their strategies based on the new, standardized expiry schedule—bringing a long-awaited sense of order to the derivatives market.

Stay tuned for updates as SEBI releases the official guidelines.

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India’s wholesale inflation eased to 0.39% in May 2025, marking its lowest level in 14 months, according to government data released on June 16. This is the third straight month of decline in the Wholesale Price Index (WPI), signaling continued disinflationary momentum across the economy.

The latest figures follow the Consumer Price Index (CPI) falling to a near six-year low of 2.82%, reflecting broad-based cooling, particularly in food inflation, which dipped below 1%—a level not seen in nearly four years.

Inflation Trends and RBI’s Policy Response

WPI inflation stayed subdued for most of FY24, and although there was a slight rise early in FY25, it has remained well below 3% throughout the year.

This consistent decline in both retail and wholesale inflation has opened the door for monetary easing. The Reserve Bank of India (RBI) has responded with:

• A 50 basis points (bps) rate cut in early June
• 25 bps cuts in February and April

With these moves, the repo rate now stands at 5.5%, a full percentage point lower than at the start of the year.

Outlook for 2025 and Beyond

Economists suggest that further rate cuts may be on the table if the current disinflationary trend continues. Reinforcing this view, the RBI revised its FY26 inflation forecast down to 3.7%, from an earlier estimate of 4%.

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The sustained decline in inflation is not only providing relief to consumers and businesses but also giving the central bank more flexibility to support growth through accommodative policy measures.

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India’s trade deficit narrowed to $21.88 billion in May 2025, down from $26.42 billion in April, a five-month high, according to data released by the Ministry of Commerce and Industry on Monday. The decline was primarily driven by a drop in imports.

The figure also came in lower than the $25 billion estimate projected by economists in a Reuters poll, offering a positive surprise for markets.

Export and Import Trends

• Merchandise exports fell 2.2% year-on-year to $38.73 billion
• Imports dipped 1.76% to $60.61 billion

On the services front, India posted an estimated surplus of $14.65 billion in May:

• Services exports stood at $32.39 billion
• Services imports rose to $17.14 billion, according to Trade Secretary Sunil Barthwal

Strong Growth in Electronics, Chemicals & Pharma

Despite the overall export dip, some categories posted strong growth:

• Electronic goods, including mobile phones, surged 54% year-on-year
• Chemical exports grew 16%
• Pharmaceutical shipments rose 7.38%

Exports to US Remain Resilient Despite Tariff Hikes

India’s exports to the United States rose to $17.25 billion during April-May 2025, compared to $14.17 billion in the same period last year. This suggests that the 10% average US tariff hikes introduced in April had limited impact on Indian exports so far.

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India’s narrowing trade gap and resilience in key export categories signal cautious optimism amid global headwinds.

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Shares of Tata Motors Ltd. dropped by as much as 5% on Monday, June 16, after its luxury vehicle arm Jaguar Land Rover (JLR) issued a cautious outlook for the current financial year (FY26).

Weaker Profitability & Cash Flow Guidance

JLR expects its EBIT margin to fall to 5–7% for FY26, down from 8.5% last year. Additionally, the UK-based unit, which had reported £1.5 billion in free cash flow previously, now anticipates that figure to be “close to zero” this year.

Despite the dip, JLR management remains optimistic about the long term, aiming for:

• Free cash flow recovery starting FY27–28
• EBIT margin target of 10%, though no timeline has been provided

JLR’s Dominant Role in Tata Motors

In FY25, JLR was a major contributor, accounting for:

• 71% of Tata Motors’ total revenue
• 80% of the company’s overall profitability
  Meanwhile, average revenue per vehicle stayed above £70,000, showing no year-on-year growth.

Trade, China Plans, and Market Position

On the trade front, JLR is in ongoing talks with the Trump administration, aiming to reduce tariffs on UK exports to the U.S., which currently stand at 27.5%—while tariffs on Slovakian exports remain unchanged.

Despite a challenging premium car market in FY25, JLR maintained its No.1 position in the premium segment as of May.

To strengthen its position in China, JLR plans to license the Freelander brand to its JV partner there. The first locally produced Freelander model is expected in H2 FY26.

Stock Market Impact

Following the update, Tata Motors shares slipped 4.6% to ₹679.65, making it the top loser on the Nifty 50 and among the biggest laggards on the Nifty 500.

Investors may remain cautious in the near term as JLR’s outlook signals a challenging road ahead, despite its long-term strategic efforts.

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India’s largest lender, State Bank of India (SBI), has moved swiftly to pass on the Reserve Bank of India’s latest repo rate cut to borrowers. On Friday, SBI announced a 50 basis points reduction in its External Benchmark Lending Rate (EBLR) and home loan interest rates, effective June 15, 2025.

This move comes in response to the RBI’s decision to cut the policy repo rate by 50 bps, as the central bank looks to stimulate economic growth amid a declining interest rate environment.

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📉 What’s Changing?

• EBLR (External Benchmark Lending Rate):
  • Old Rate: 8.65%
  • New Rate: 8.15%
• Home Loan Rates (linked to EBLR):
  • Revised Range: 7.5% – 8.45%
  • Varies based on borrower’s credit score

According to SBI’s updated website, borrowers with stronger credit profiles will benefit from lower interest rates.

“We have passed the entire repo rate cut to our borrowers,” a senior SBI executive confirmed.

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💰 What About Deposit Rates?

While borrowers cheer the rate cut, depositors may face disappointment:

• Special Deposit Scheme – ‘Amrit Vrishti’ (444 days):
  • Interest rate reduced by 25 bps
  • New Rate: 6.60% (down from 6.85%)
  • Effective June 15, 2025

Other domestic retail term deposit rates (below ₹3 crore) remain unchanged for now. However, SBI had already trimmed term deposit rates across maturities by 20 bps last month, and a further review is underway.

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🏦 Why It Matters: The EBLR Explained

SBI’s lending rates are linked to the EBLR, which is pegged to the RBI’s repo rate. This ensures quicker transmission of monetary policy changes to end borrowers. The EBLR also includes:

• Credit Risk Premium – based on the borrower’s credit profile
• Business Strategy Premium – based on SBI’s internal pricing strategy

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📊 What Does This Mean for the Banking Sector?

According to a report from CareEdge Ratings:

• Deposit growth remains competitive, especially for low-cost Current and Savings Accounts (CASA)
• Banks lowering deposit rates may see a lagged impact on deposit costs over the next 2–3 quarters
• This could squeeze Net Interest Margins (NIMs) in FY26

CareEdge estimates NIMs may decline by 20–25 basis points in FY26 compared to FY25, as falling yields on loans could outpace the decline in deposit costs.

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🧾 Takeaway for Borrowers and Depositors

• Home loan borrowers: This is a good time to review your current rates and consider refinancing if you’re paying more than the revised range.
• Depositors: Interest rates are under pressure, especially for medium-term deposits. Consider shorter tenures or alternatives like debt mutual funds if you’re seeking better yields.
• Investors in bank stocks: Keep an eye on NIM pressures in FY26 as rate transmission accelerates.

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Final Word: SBI’s move is a clear signal that the Indian banking system is responding quickly to the RBI’s monetary easing. While borrowers benefit immediately, depositors and bank margins could feel the heat in the coming quarters.

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