Domestic Factors Boost Mkt Momentum; Global Unease Calls For Caution

Monday always means a new beginning. A fresh start for the capital markets as well, with new hopes, new expectations. In the coming week, Indian markets are expected to be shaped by a blend of domestic and global developments. Domestically, the Reserve Bank of India’s (RBI) 50 basis point rate cut on June 6, 2025, would likely to bolster market momentum in the near term and could drive sectoral runs in interest-sensitive sectors. The government’s recent decision to lower the interest rate by 50 paisa will have positive impacts on the economy. This change will lower the cost of home loans as well as other forms of credit like car loans, business loans, and MSME loans. These changes are likely to stimulate demand in the real estate market because more favourable financing conditions tend to attract homebuyers and investors to the market. Now that the interest rate has decreased from the previous 8.5 – 9 per cent to the new interest rates, it is expected that there will be an increase in activity across consumption-driven industries.

Additionally, the reduction in interest rate will impact returns on fixed deposits which were attractive during the high-rate period. With a decline in FD rates, it is expected that there will be an increased shift in investors to mutual funds, debt instruments and other market-linked products. This may result in renewed investments into the capital markets which would improve liquidity and growth. In general, these changes have the potential to positively influence the credit, consumption, and investment cycles in the economy.

Overall, while recent domestic updates like low inflation and Q4 GDP growth supports a positive outlook, global uncertainties and tariff-related risks could keep markets on edge and add to market volatility. At least that’s what the market analysts feel. One must not forget at this point that while Monday marks a fresh start, there is always a degree of continuity. It is therefore wise to take a look at the market performances in the previous weeks, or particularly, in the immediate past week.

Indian benchmark indices—Nifty50 and Sensex—snapped a two-week losing streak to post weekly gains of nearly 1 per cent. The Nifty advanced 252 points, closing just above the psychologically crucial 25,000 mark, while the Sensex added 738 points to end at 82,189. The Bank Nifty outperformed, rising 1.5 per cent to settle at 56,578.40 after hitting a fresh all-time high of 56,695, extending its winning streak to four consecutive weeks. The uptrend was largely driven by a surprise move from the Reserve Bank of India, which cut the repo rate by 50 basis points to 5.50 per cent—double the market expectation. Additionally, the central bank reduced the Cash Reserve Ratio (CRR) by 100 basis points to 3 per cent, the lowest level since April 2021, further boosting market sentiment.

One must keep in mind that the RBI also shifted its policy stance from 'accommodative' to 'neutral', which understandably signals a cautious but supportive monetary outlook. From a sectoral perspective, the realty index led the rally with a sharp 9.5 per cent weekly gain, while media and energy sectors closed in the red. On the technical front, Nifty continues to trade above all key moving averages, with no signs of bearish divergence in major oscillators, suggesting sustained bullish momentum. In terms of market participation, Foreign Institutional Investors (FIIs) remained net sellers, offloading Rs 3,565 crore in equities. However, strong domestic institutional flows offset the pressure, as DIIs infused Rs 25,513 crore into the cash segment, providing solid support to the broader market.