Investors will keenly watch the Reserve Bank of India's (RBI) upcoming monetary policy decision for future market guidance. Additionally, market participants will monitor global developments, particularly trade tensions, to navigate the ongoing consolidation phase.
India's equity market closed in the red this week. The subdued performance was primarily driven by global trade tensions and anticipation around domestic policy decisions.
Benchmark indices, the Sensex and Nifty, experienced significant swings before closing lower amid uncertainty over U.S. tariff developments and caution ahead of the RBI's policy announcement. Both indices declined over 1%, with the Nifty ending at 24,750.70 and the Sensex at 81,451.01.
“Despite encouraging domestic cues, mixed signals from global markets kept investor sentiment on edge. Initially, optimism prevailed following the RBI’s record dividend payout and positive updates regarding the monsoon. However, as the week progressed, concerns surrounding rising U.S. bond yields, trade tensions between the U.S. and the European Union, and the ongoing legal battle over U.S. tariffs weighed on market sentiment, limiting the scope for any meaningful recovery,” said Ajit Mishra – SVP, Research, Religare Broking.
He added that looking ahead, all eyes will be on the outcome of the RBI’s Monetary Policy Committee (MPC) meeting scheduled for June 6. The market is pricing in a 25bps cut, which will improve the outlook for rate-sensitive sectors.
“The central bank’s stance on the rate trajectory, especially amid mixed macroeconomic signals, will be critical in shaping market direction...Globally, developments in the U.S. bond market and any updates regarding ongoing trade negotiations will continue to influence investor sentiment,” stated Mishra.
Puneet Singhania, Director at Master Trust Group, said that despite the weekly downturn, both benchmark indices remained comfortably above their key moving averages, signaling resilience in the broader market trend. The PSU Bank index led sectoral performance, surging nearly 4%, buoyed by positive sentiment towards public sector banks.
He added that in the derivatives segment, the Nifty’s Open Interest Put-Call Ratio (OI PCR) for the upcoming weekly expiry stood at 0.58, while the Sensex’s OI PCR was 0.62. These levels, significantly below 1, suggest that call writers currently hold a dominant position, reflecting bearish sentiment among options traders.
Mishra said they maintain a constructive view on the markets and recommend looking for buying opportunities unless the Nifty decisively breaks below the 24,600 mark. “Within sectors, banking and financial services remain our top picks, while FMCG and IT are expected to trade subdued. With the broader market showing resilience, investors should continue focusing on fundamentally strong stocks that offer a favorable risk-to-reward ratio,” he stated.