Indian markets concluded another week with a cautious stance, marking a second consecutive week of consolidation. This subdued sentiment is largely attributed to ongoing global trade tensions and anticipation surrounding key domestic policy announcements. Benchmark indices, the Sensex and the Nifty, experienced significant volatility before closing in the red. By the week's end, the Nifty settled at 24,750.70, while the Sensex closed at 81,451.01. Despite the weekly downturn, both indices remained comfortably above their key moving averages, signaling resilience. However, the market also registered its third straight monthly gain, buoyed by steady institutional inflows and positive earnings momentum, even amidst geopolitical and trade concerns.

Looking ahead, a critical factor for market direction will be the outcome of the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting scheduled for June 6. The central bank's stance on the rate trajectory, particularly amid mixed macroeconomic signals, is highly anticipated. Market participants will be keenly watching for any indications on future policy, with some analysts pricing in a potential 25 basis points rate cut, which could provide a positive outlook for rate-sensitive sectors.

With the commencement of a new month, investors will closely track high-frequency domestic data, including crucial auto sales numbers and other economic indicators, to assess the health of the economy. Alongside these, the trend in institutional investor flows will be closely monitored. On the preceding Friday, Foreign Institutional Investors (FIIs) were net sellers to the tune of Rs 6,449.74 crore, while Domestic Institutional Investors (DIIs) acted as net buyers, infusing Rs 9,095.91 crore. However, for the month of May up to the 30th, FIIs turned net buyers of equity worth Rs 18,082 crore, a notable shift from their selling trend in the first three months of the year. This change is attributed to factors such as a declining dollar, slowing US and Chinese economies, and positive domestic macros. DIIs also demonstrated strong conviction, injecting a substantial ₹33,144 crore into the cash market during May, providing critical support to the indices.

Global developments will continue to exert significant influence on investor sentiment. Key among these are movements in the U.S. bond market and any updates regarding ongoing trade negotiations. The impact of U.S. trade and tariff policies, including the recent temporary reinstatement of Trump-era tariffs which introduced volatility, remains a concern. Persistent worries about rising US bond yields and trade tensions between the US and the European Union (EU) also weigh on the market. In the commodities space, U.S. crude futures saw a decline of more than $1 a barrel on Friday, driven by expectations that OPEC+ might decide to increase oil output for July. Brent crude futures also edged lower.

The Indian Rupee's movement will also be a key variable. The currency traded weaker by 8 paise at 85.52 against the U.S. dollar recently, influenced by a gain in the dollar index. The Rupee is anticipated to remain volatile, likely trading in the range of 85.00 to 85.90. Market participants are particularly focused on the upcoming RBI monetary policy decision for further directional cues for the currency.

From a technical perspective, the Nifty 50 index has shown volatility with a slightly negative bias and is expected to make a directional move soon after two weeks of consolidation. Shorter time frames reveal a bearish moving average crossover, and the hourly Relative Strength Index (RSI) indicates bearish price momentum, suggesting potential short-term weakness. Signs of exhaustion are also visible on the daily RSI, accompanied by a strong negative divergence. Immediate support for the Nifty is placed at 24,700; a breach below this could lead to a decline towards 24,500. On the upside, 24,800 is likely to act as a crucial resistance level due to significant call writer positions at that strike. Maintaining a position above the 20-day exponential moving average (20-DEMA), currently around 24,600, will be essential to sustain a positive tone. A decisive breach of this level could trigger further profit-booking, potentially dragging the index towards the 24,200 mark. Conversely, a strong close above 25,200 could rekindle bullish momentum, opening the path towards the 25,600+ zone. The banking index is considered pivotal for overall market momentum, currently trading within a narrow range but sustaining above its short-term support at 55,000 (20-DEMA). A breakout above 56,000 in the banking index could act as a catalyst, propelling it towards the 57,500 level.

On the macroeconomic front, recently released government data indicated that India's GDP growth pace slowed to 6.5 per cent in the fiscal year 2024-25 (FY25), compared to FY24 levels. However, there was an encouraging pickup in momentum during the January-March quarter of FY25, with growth reaching 7.4 per cent. Overall, domestic economic indicators are largely viewed as favorable. Positive factors such as a better monsoon forecast, a benign inflation trajectory, and the pleasant Q4 GDP growth figures are expected to provide a cushion against market downsides. These positive macroeconomic scripts could enhance investor sentiment, but sustained market stability will ultimately hinge on robust corporate earnings growth and an easing of global trade tensions.

The primary market is set for continued activity in the upcoming week. While no new mainboard Initial Public Offerings (IPOs) are scheduled to open for subscription, the Small and Medium Enterprises (SME) segment will see one new issue open for bidding. In terms of listings, shares of Leela Hotels (Schloss Bangalore Limited) and Aegis Vopak Terminals are expected to debut on the BSE and NSE on June 2, 2025. Furthermore, a number of companies will see corporate actions take effect. Shares of prominent firms such as Larsen & Toubro (L&T), Tata Motors, Tata Steel, Tata Consultancy Services (TCS), INOX India, Bank of Baroda, and Container Corporation of India (CONCOR), among others, will trade ex-dividend starting from Monday, June 2. Some stocks are also slated to trade ex-bonus and ex-split during the week.