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Informist, Thursday, Jun. 5, 2025

By Akash Mandal

MUMBAI – Benchmark indices are seen rangebound Friday, with the outcome of the Reserve Bank of India's monetary policy likely to determine the market's direction, analysts said. The market has already factored in a 25-basis-point cut, and an outcome outside what is already expected could cause the market to move, they said. 

"At least 25 bps looks certain, but at the moment there looks like a 50-50 chance of a higher quantum of cut... why won't the RBI cut rates by a larger quantum when macroeconomic data looks good?" Vinit Bolinjkar, head of research at Ventura Securities, said. "If rates are cut by 25 bps, then the market will continue to rally like the last two days and a 50 bps cut would push the Nifty past 25000," Bolinjkar said. However, if the RBI keeps rates steady, Bolinjkar sees a knee-jerk reaction from the market. "The reaction will be quite steep, the Nifty might fall to 24500 and is likely to break even that level," he said.

Jatin Gedia, technical research analyst at Mirae Asset Sharekhan, also expects a rally if the rate cut is above 25 bps. "If the decision is inline, then the market will be broadly in range... if the cut is by 50 bps, then the Nifty might rally to 25000," Jatin Gedia, technical research analyst at Mirae Asset Sharekhan, said.

On Thursday, the Nifty 50 ended at 24750.90 points, up 130.70 points or 0.5%. The BSE Sensex closed at 81442.04 points, up 443.79 points or 0.6%. On Friday, the 50-stock index is likely to face resistance at 25100 points and support at 24500-24550 points, analysts said.

The Indian stock market had surged nearly 13% in a nearly two-month period amid buying from foreign investors, the conflict between India and Pakistan, and the flip-flops on tariffs by the US. The market has been consolidating for the past two weeks. Despite the sharp rise, Capital Economics does not see the strong performance sustaining in the near term. The rally had been led primarily due to a fall in local bond yields due to liquidity injection by the RBI, the London-based economic research firm said. The rally has also been majorly driven by certain sectors such as defence, financials, and consumer discretionary.

While the market might see a rally in industrials stocks as being driven by a boost to India's manufacturing prospects as a consequence of the US-China tensions, a part of the rally has been driven by defence stocks, Capital Economics said. The optimism regarding these stocks post the India-Pakistan conflict has now been factored in, leaving limited upside for the future, it said.

Investors will also look ahead to the US employment report for May, which will provide cues on the health of the US economy amid concerns of an economic slowdown due to tariffs.  End

Edited by Saji George Titus

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