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Informist, Friday, Jun. 5, 2026

 

By Arundathi A R

 

MUMBAI – Analysts are divided on the market's direction in the coming week amid negative sentiment lingering around the West Asia war. Some analysts expect the market to recover, as measures announced by the Reserve Bank of India and the government are expected to arrest the rupee's depreciation. However, crude oil prices must come down, and economic growth should improve for foreign investors to turn buyers, they said.

 

"RBI MPC outcome is giving some kind of tailwind to the FIIs," Sanjeev Hota, head of equities strategy at Standard Chartered India, said. According to him, the outcome is broadly in line with the market expectations and directionally positive for the economy. The central bank left the policy repo rate unchanged at 5.25% in a unanimous decision and decided to continue with its "neutral" policy stance.

 

It also announced several measures, including a concessional forex swap facility and relief on hedging costs, to help improve foreign flows. The government on Friday also exempted foreign institutional investors from paying capital gains tax on investments in government bonds. These measures are expected to improve flows and arrest depreciation in the Indian currency. Post this, the rupee appreciated nearly 1% and ended below 95 a dollar. "This move is expected to bring some kind of stability to the rupee within the next three to six months," Hota said. However, a lot of things depend majorly on how the war is going to pan out, he said.

 

"The revision of GDP growth rate downwards to 6.6% and CPI inflation upwards to 5.1% reflect the realistic assessment of the ongoing energy crisis," V.K. Vijayakumar, chief investment strategist at Geojit Investments, said in a note. "The revision of inflation upwards indicate that rate hikes are likely later in the year. The extent of rate hikes will depend on the incoming data and evolving outlook."

 

RBI projected headline inflation for FY27 at 5.1%, up from 4.6?rlier. The inflation projection for the June quarter was raised to 4.2% from 4.0%. For GDP, the RBI projected growth in FY27 at 6.6%, against 6.9?rlier, with the June quarter growth seen at 6.6%, down from 6.8?rlier.

 

Though the GDP and inflation announcements were almost in line with expectations, Hota sees the inflation growth to largely depend on crude oil price trends. "And if crude is going to moderate from the current level, I think we are in a good situation," he said. "So anything below 90 ($90 a barrel), it is going to be good for the macro." At 1638 IST, Brent crude oil August futures were 0.2% lower at $94.83 a barrel. 

 

On Friday, the Nifty 50 settled 0.2% lower at 23366.70, down 49.85 points. The BSE Sensex also closed 0.2% lower at 74243.34, down 116.67 points. "I expect the market to recover in the coming week," Sundar Kewat, technical and derivatives analyst at Ashika Institutional Equity Research, said. He expects the Nifty 50 to face resistance at 24000 and find support at 23150.

 

"The underlying trend of Nifty remains choppy with positive bias," Nagaraj Shetti, senior technical research analyst at HDFC Securities, said in a note. "A decisive breakout of 23500 could open further upside towards the next hurdle of 23800–23900 levels by next week."

 

Foreign investors net sold shares worth INR 44.47 billion Thursday, down from INR 56.17 billion the previous day. Domestic investors continued supporting the equity market by net buying shares worth INR 43.60 billion. Foreign institutional investor flows rose almost 79% in a week.  End

 

US$1 = INR 94.9450

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

 

Edited by Avishek Dutta

 

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