Government has granted FIIs full exemption on both capital gains and interest income from G-Sec investments, effective April 1, 2026. This removes the 12.5% LTCG tax and 20% withholding tax on interest previously applicable. The ordinance route was used since Parliament is not in session. FPIs have pulled out a net ₹2.63 lakh crore from India in 2026, and this measure is a massive move by the Government to reverse heavy outflows, lift post-tax returns on sovereign debt, and steady the rupee.

The RBI held rates but the real story is what it said about growth and inflation. Governor Sanjay Malhotra announced today that the MPC unanimously voted to keep the repo rate unchanged at 5.25% for the third consecutive meeting. The RBI simultaneously lowered its FY27 GDP forecast to 6.6% from 6.9%, citing elevated energy and commodity prices and continued supply disruptions from the West Asia conflict. It also raised its FY27 inflation projection to 5.1% from 4.6% pinning both moves squarely on crude oil. The neutral stance was maintained, which in plain language means rate cuts are off the table until the inflation picture improves meaningfully.

India's CPI for May releases on Friday, June 12 and the number matters more than usual. The Ministry of Statistics has confirmed the May 2026 CPI release for June 12. April CPI came in at 3.48%, slightly above March's 3.40%, the fastest pace in a year but still well below the RBI's tolerance band ceiling. The gap between the current 3.48% reading and the RBI's FY27 projection of 5.1% tells you everything, the energy cost passthrough from elevated crude hasn't fully shown up in retail prices yet. If May CPI breaks above 4%, it will reinforce the RBI's hawkish pivot and put further pressure on long-duration bond funds.

US CPI for May also drops next week and a hot print could hurt the rupee. The last reported US inflation rate was 3.8%, with the Fed firmly on hold. A number that comes in above expectations would further push back any Federal Reserve rate cut timeline, strengthen the dollar, and tighten the screws on emerging market currencies including the rupee. For Indian investors, the dollar-rupee rate is not just a currency story, every 1%-rupee depreciation adds directly to India's oil import bill and corporate forex hedging costs. This is a number worth watching even if you don't hold any US assets.

The Iran ceasefire MOU is sitting on Trump's desk and his decision could move Indian markets sharply in either direction. US and Iranian negotiators reportedly reached a preliminary 60-day memorandum of understanding to extend the ceasefire and start nuclear negotiations, but the deal requires President Trump's final approval. If he signs, Brent crude could fall sharply toward $80–85 within days, triggering a simultaneous relief rally in Indian equities, the rupee, and bonds. If he rejects it, expect crude to spike back above $100. There is no middle outcome here. This single decision will likely determine the direction of Indian markets in the week ahead more than any domestic data point.