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Informist, Thursday, Jun. 4, 2026

 

By Arundathi A R

 

MUMBAI – Domestic equity indices are expected to move in a range Friday ahead of the outcome of the Reserve Bank of India's Monetary Policy Committee meeting. Any major triggers from the West Asia war and crude oil price movements will also lend direction to the market in the coming days, analysts say.

 

"No significant movement on either side is expected unless a major announcement is made in the MPC meeting on Friday," Rupak De, senior technical analyst at LKP Securities, said. He expects the Nifty 50 to face resistance at 23600 level and find support at 23300 levels. On Thursday, the Nifty 50 closed 0.1% higher at 23416.55, up 10.95 points.

 

The Union Cabinet Wednesday gave a green signal to a plan to lower the capital gains tax and withholding tax on government bonds to attract foreign investment and help protect its foreign exchange reserves, according to sources. "Eliminating capital gains tax (CGT) on FPIs' investments in government bonds could boost foreign demand for Indian G-secs, improve after-tax returns, deepen markets, and and lower government borrowing costs while aligning India's tax regime with global norms," said Manoranjan Sharma, chief economist at Infomerics Ratings. However, he sees this leading to revenue loss and concerns about preferential treatment compared to domestic investors, and might encourage tax arbitrage.

 

Brokerage Nuvama Institutional Equities trimmed its earning-per-share estimate for the Nifty 50 by 1% for 2026-27 (Apr-Mar), it said in an earnings review report. The earnings-per-share estimates for FY27 and FY28 at INR 1,230 and INR 1,415, respectively, are expected to be at risk given the large uncertainties, according to Nuvama. Markets are likely to be volatile due to oil shocks amid higher valuations and weak incomes. However, the brokerage sees a steep earnings recovery at a compounded annual rate of 17?tween FY26 and FY28, higher than the 9% growth seen between FY24 and FY26. 

 

Analysts at JM Financial Institutional Securities took a cautious stance on earnings estimates for FY27, after such estimates over the past two years have failed to gauge earnings correctly. They see a higher possibility of downgrades in estimates on account of the recent track record of earnings downgrades and risk from higher crude oil prices. "While Q4FY26 (Jan-Mar) results have led to an upward revision in our FY27E Nifty 50 EPS growth forecast to 17.1%, the recent track record of earnings downgrades warrants caution," analysts said in a report.

 

"Inflation remains crucial. My baseline expectation is that CPI inflation will average closer to 4.6 per cent in FY27, with risks clearly tilted to the upside, particularly from oil, global spillovers, and potential monsoon disturbances," Sharma of Infomerics Ratings said. "The RBI may raise projections by 30–50 bps as imported inflation risks from crude and rupee weakness intensify."

 

At 1649 IST, Brent crude oil August futures were 1.6% lower at $96.29 a barrel. Though crude oil prices fell from the previous close after rising for the past three sessions, it remained at higher levels. The futures contract gained nearly 6% in a week. Price rose over 32% from pre-war levels.

 

Going ahead, any positive trigger on the domestic or global fronts would reignite catch-up activity in the domestic market as global peers like the S&P 500, Nikkei, and KOSPI are already trading at record highs, ICICI Direct said in a note. According to the brokerage, the better-than-expected corporate earnings season has provided a cushion for the broader market.

 

Foreign investors net sold shares worth INR 56.17 billion Wednesday, down from INR 83.63 billion the previous day. Domestic investors continued supporting the equity market by net buying shares worth INR 57.41 billion. Foreign institutional investor flows rose over 73% in a week.

 

The Indian rupee settled at a two-week low of 95.7850 a dollar Thursday. "The RBI's commentary will be the critical catalyst for the rupee's next leg," Dilip Parmar, research analyst at HDFC Securities, said in a note. "Technically, USDINR spot sees strong resistance at 95.80, with a breakout opens the level of 96.50, while key support has shifted to 95.30 from 94.73."  End

 

US$1 = INR 95.7850

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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