More Stories

Informist, Friday, Jun. 6, 2025

By Akash Mandal

MUMBAI – Benchmark equity indices are expected to rally further next week, buoyed by a higher than expected repo rate cut by the Reserve Bank of India. Analysts had expected the policy meeting outcome to be a trigger for the market after a couple of weeks of range-bound trade, which turned out to be true. Some analysts say the Nifty 50 may test 25100 levels next week, with support pegged at 24600-24500.

"The market has broken out after being range-bound for some time due to lack of fresh triggers...the Nifty might test 25100, and then 25500-25600 if the previous level has broken," a technical analyst at a domestic brokerage said. Buoyed by the rate cut and a cut in the cash reserve ratio, the Nifty 50 Friday ended above the psychologically important 25000 level after eight sessions. The Nifty 50 ended at 25003.05 points, up 252.15 points or 1%, and the BSE Sensex closed at 82188.99 points, up 746.95 points or 0.9%. Both the Nifty Bank and the Nifty Financial Services hit all-time highs during the session.

Despite a positive outlook, RBI's change in stance to 'neutral' from 'acommodative' may weigh on the market, as some analysts had expected a deeper rate cut cycle. "We believe our baseline forecast of 5.5% terminal repo rate has been met. However, considering still elevated global uncertainty, we think RBI has kept a buffer of another 25-50 bps rate cut in case growth surprises lower," global brokerage UBS said in a report.

Ratings agency CRISIL expects another rate cut in 2025-26 (Apr-Mar). "A healthy monsoon, coupled with low crude prices, is likely to keep inflation aligned to the RBI's 4% target this fiscal...the rate cuts will be pivotal in supporting domestic growth this fiscal against external headwinds," the ratings agency said in a report.

Some market participants also believe that the market was too optimistic on the back of a better-than-expected outcome from the policy meeting. "Market has obviously taken it positively...I think soon, people will understand it was a short-term reaction and will realise these levels are not sustainable at current valuations and earnings growth," Pravin Bokade, head of equity research at IDBI Capital Markets & Securities, said.

"We might see a pull-back and the market will be rangebound thereafter to normalise post the sharp gains," Bokade said. He added that while the RBI has done all it can to revive demand and consumption, which have been sluggish for quite some time now, it now up to the government and private players to follow it up.

Banks, NBFCs, and other financial services stocks will continue to be in focus next week after the rate cut. The Nifty Bank and Nifty Financial Services may rise further after hitting record highs Friday, analysts said. "Easing interest rates may compress bank margins, as lending rates adjust faster than funding costs...however, banks benefit from trading profits, with 10-year government security yields dropping from 6.8% to 6.2% since March 2025," Systematix Institutional Equities said in a report. "NBFCs, reliant on bank borrowings or market rates, face a favorable funding environment," the report said. Stocks in sectors such as real estate, automobile, and consumer goods will also remain in focus.  End

Edited by Avishek Dutta

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.