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The Indian stock market ended its two-week losing streak and posted a strong rally in the first week of June, with the Sensex and Nifty 50 closing near their weekly highs. This came after a surprise 50 basis point repo rate cut and a 100 basis point CRR cut by the Reserve Bank of India (RBI), which acted as a shot in the arm for market sentiment.
Despite ongoing trade tensions and uncertainty around global tariffs, domestic cues, including the RBI’s aggressive monetary easing, have renewed confidence among investors. The Nifty ended above the psychological 25,000 mark, and the Sensex closed 747 points higher at 82,188.99 on Friday, June 6.
Key Triggers to Watch Next Week
As we step into the second week of June, several domestic and global events are poised to dictate market sentiment:
India’s Retail Inflation Data: Expected to provide cues for future monetary policy actions.
Global Tariff Announcements: Especially developments in US-India trade negotiations.
FII Activity: After being net buyers for three consecutive months, FIIs turned net sellers in June.
Macroeconomic Releases: Industrial output and manufacturing data are on investor radars.
Primary Market Buzz: IPOs and SME listings are expected to keep the primary market vibrant.
‘Apart from that, on the international front, China’s trade balance, US Core CPI and Eurozone industrial production data are to be released in the coming week, so market participants would keep a close eye on those and that will shape the direction of the market for the next week,’ said Sugandha Sachdeva, Founder of SS WealthStreet.
Expert View: Surprise Rate Cut Acts as Technical Catalyst
Sudeep Shah, Deputy VP and Head of Technical & Derivatives Research at SBI Securities, noted how RBI’s unexpected move triggered a technical breakout.
“The best trades often come wrapped in surprise announcements and clean technical setups. That’s exactly what played out this week,” Shah said.
“Bank Nifty, which had been moving in a narrow consolidation band for over 31 sessions, broke out with conviction. Nifty also rebounded from the lower end of its range and is now on the verge of a decisive breakout.”
‘After two weeks of sluggishness, strength, Nifty closed with gains of more than 1% and Bank Nifty scaled to new record highs, gaining by 1.5% for the week. It was despite the global uncertainties, Nifty managed to scale higher. It was all because of the RBI monetary policy decision wherein RBI delivered a larger than expected 50 basis point rate cut and further complemented it with a CRR cut of 100 basis point,’ said Sachdeva.
She also added, “The CRR cut is expected to infuse Rs 2.5 trillion into the banking system, injecting huge liquidity in the system, which is likely to spur credit growth and boost sentiments in the rate-sensitive sectors. Inflation forecast has also eased to 3.7% for FY26 while growth rate was maintained at 6.5% for FY26. All of these factors, the lower inflation forecast as well as the GDP growth maintained at 6.5% bodes well for the market outlook for the coming week as well.”
Nifty Outlook: 25,500 Possible, 24,700 as Strong Support
The Nifty formed a bullish weekly candle with a lower shadow, indicating buying interest at dips. The index trades comfortably above its key moving averages, with supportive momentum indicators.
Nifty Levels to Watch:
Upside Target: 25,200–25,500
Support Zone: 24,700–24,750
Historical data also supports a positive trend for Nifty in June. In the past 18 years, the index has ended higher on 11 occasions, with an average gain of 4.19%.
Bank Nifty: Fresh Highs and Cup Pattern Breakout
Bank Nifty was the week’s star performer, breaking out of a classic Stage-2 cup pattern and forming a strong bullish candle on the daily chart. The index hit a fresh all-time high and showed robust momentum.
“Technically, all moving averages and RSI (currently at 67.45) indicate strong upside,” said Shah.
Bank Nifty Key Levels:
Upside Target: 58,700 (Cup pattern projection)
Support Zone: 55,600–55,700
In terms of history, Bank Nifty has posted gains in June in 11 out of the last 18 years, averaging 4.52% in positive years, as per Shah.
Sachdeva also said, “In terms of the key levels, 25100-25200 is the crucial resistance zone. Only in case that is breached, we see further gains in the index. However, otherwise the index is expected to consolidate, wherein the key support is seen at 24800 odd levels owing to any negative global cues. In case the index is not able to hold above 24800, we see it slipping lower towards 24400 as well. However, the bias remains positive and once there is a breakout above 25200 odd levels, we see the index heading higher towards 25700-25800 odd levels in the coming week.”
Sectoral Spotlight: Realty, Banks, and Financials Lead
Realty Sector Outshines
The Nifty Realty index gained for the fourth consecutive week and outperformed broader indices. Technical charts indicate that the momentum is intact.
Preferred Realty Stocks:
DLF
Godrej Properties
Oberoi Realty
Arkade Developers
Sobha Developers
The RSI for the realty index is in the “super bullish” zone, suggesting further upside in the coming week.
Read More – Selling Stocks! How To Save Capital Gain Tax? All You Need To Know
Financial Sector Gathers Steam
Nifty Bank, Nifty Private Bank, and Nifty Financial Services all broke out of consolidation on strong volumes. These indices are likely to continue their upward momentum.
Stocks to Watch in Banking & Finance:
HDFC Bank
Axis Bank
ICICI Bank
IDFC First Bank
AU Small Finance Bank
“These stocks are trading above their key moving averages with momentum indicators supporting the rally,” Shah added.
FII Activity: Watch for a Short-Covering Rally
Foreign Institutional Investors (FIIs) were net buyers in equities from March to May but have turned net sellers in June. However, the FII long-short ratio in derivatives stands at just 20.87%, indicating a high short bias.
This suggests that the bulk of bearish sentiment may already be factored in. A sustained rally could trigger short covering, leading to renewed FII buying.
Other Sectors to Track
Metals & Industrials
Nifty Metal index remains bullish, supported by strength in key commodities and positive sentiment from Chinese stimulus expectations.
Auto, CPSE & PSE
After testing support zones, these indices bounced back strongly last week. The bounce appears technically strong, and these sectors could see selective stock-level action in the coming sessions.
‘On the other hand, Nifty Auto, Nifty CPSE, and Nifty PSE have bounced back smartly from their respective support zones. This rebound is technically encouraging and points towards the continuation of bullish momentum in the near term,’ Shah Added.
Market Poised for Breakout, but Watch Key Triggers
The Indian stock market seems poised for an upward breakout, driven by domestic policy support and favorable technical setups. However, global cues, inflation numbers, and FII flows will remain crucial in deciding whether the breakout sustains.
In the near term, analysts expect Nifty to test 25,500 and Bank Nifty to trend toward 58,700, while any pullback could offer fresh buying opportunities given the strong support levels.
Disclaimer
The views expressed in this article are purely informational and Republic Media Network does not vouch for, promote or endorse any opinions stated by any third party. Stock market and Mutual Fund investments are subject to market risks and readers are advised to seek expert advice before investing in stocks, derivatives and Mutual Funds