Stock markets are poised for a cautious start on Friday as participants await the Reserve Bank of India's monetary policy decision. Global crude oil prices remain steady amid a lack of clarity surrounding US-Iran peace negotiations. Market experts anticipate domestic equities to stay largely range-bound in the near term as investors weigh a mix of local and global factors.
RBI Policy in Focus
The RBI's Monetary Policy Committee is expected to deliver key signals on interest rates, inflation, economic growth, and currency trends. Investor sentiment received a boost from reports that the government is considering tax incentives for foreign portfolio investors in government securities, a move aimed at attracting overseas capital and supporting the rupee.
Bank Nifty Outlook
According to Bajaj Broking, the Bank Nifty formed a third consecutive bullish candle on the daily chart, with higher highs and higher lows, indicating a continuation of the pullback from key support levels amid stock-specific action. The index is likely to consolidate in the 52,500–55,500 range, with a breakout or breakdown needed to signal directional momentum. Key support is placed at 52,700–52,500, while resistance lies at 55,000–55,500.
Range-bound Movement Expected
Indian equities are expected to trade in a range in the near term, influenced by domestic and global developments. The RBI policy outcome on Friday will be closely watched for cues on interest rates, inflation, and growth. Globally, investors are tracking US-Iran talks, as any progress could ease crude supply concerns. Persistent FII selling remains a key overhang.
On Thursday, markets traded positively after recent volatility. Sentiment improved on reports of tax benefits for foreign portfolio investments in government securities, aimed at attracting capital and supporting the rupee. The Nifty closed flat at 24,416, while Midcap and Smallcap indices gained 0.5% each. Consumer Durables led sectoral gains, rising 2.2%, while Metals, IT, and Cement lagged. The defence sector is in focus after reports of military drone procurements worth over ₹20,000 crore from domestic manufacturers.
India-Venezuela Engagement
India and Venezuela strengthened bilateral ties after Prime Minister Narendra Modi met Venezuela's Acting President Delcy Rodríguez to discuss cooperation in energy, trade, and investment. This comes as India ramps up crude oil imports from Venezuela, which recently recorded its highest oil exports in seven years, with India as a major buyer. The engagement supports India's energy diversification efforts.
Looking ahead, the RBI policy outcome, West Asia developments, energy price movements, and FII flows will remain key drivers of market sentiment, according to Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd.
FPIs Reduce Selling in Financials
Foreign portfolio investors trimmed their holdings in financial services stocks during the latter half of May, though selling eased compared to earlier in the month. NSDL data shows FPIs sold financial-sector shares worth ₹5,181 crore in the second half of May, a marked improvement from nearly ₹17,000 crore in the first half. The sector had seen outflows of over ₹60,000 crore between January and March.
U R Bhat, Co-founder and Director at Alphaniti, noted that banking stocks offered a liquid route for overseas investors to reduce India exposure. Despite persistent selling, the sector has remained relatively resilient. Investors are now shifting focus to cutting exposure in other market segments. Over the past month, the Bank Nifty declined around 1%, outperforming the Nifty 50, which fell 2.9%.
Oil Prices Steady
Oil prices were largely steady on Friday after significant losses in the previous session, as hopes for a swift resolution to the Iran conflict weakened. Hezbollah rejected a fresh ceasefire proposal in Lebanon, reducing expectations of an end to hostilities. Brent crude slipped 21 cents (0.22%) to $95.24 a barrel, while WTI crude traded at $92.94, down 10 cents (0.11%).
Nifty Technical Outlook
Bajaj Broking noted that the Nifty recovered from a gap-down opening for the third consecutive session, closing above 23,400. The daily chart formed a bullish candlestick pattern, indicating consolidation. Buying emerged from the key support zone of 23,200–23,000. The index is likely to consolidate in the 23,000–23,550 range. A move above Tuesday's high of 23,556 could open upside towards 23,750–23,800. Key support is at 23,200–23,000.
Market sentiment remains cautious, with a short-term negative bias as long as the Nifty stays below 23,500. Asian equities traded lower, and US equity-index futures slipped as AI enthusiasm cooled. US equities ended higher on Thursday on optimism about resolving the Iran conflict, but Nasdaq gains were limited by weak Broadcom earnings.
Crude oil prices were steady after sharp losses, as hopes for a resolution to the US-Israeli conflict with Iran faded after Hezbollah rejected a ceasefire.
Disclaimer: Recommendations and views on the stock market, other asset classes, or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India.
