Indian stock markets concluded a highly volatile week on a negative note, with both the BSE Sensex and NSE Nifty registering declines. The 30-share Sensex fell 0.84% to close at 74,775.74, while the 50-share Nifty dropped 0.72% to settle at 23,547.75. Both benchmark indices saw a significant approximately 1.5% dip in Friday's final trading session.
Factors Influencing Market Performance
Initially, hopes for easing crude oil prices and a potential US–Iran peace agreement had propelled the Nifty back above the 24,000 mark. However, this optimism faded quickly amidst renewed geopolitical tensions in West Asia and persistent outflows from foreign institutional investors (FIIs).
Ajit Mishra, SVP of Research at Religare Broking Ltd, noted the market's “highly volatile week” ending lower after three consecutive sessions of weakness. Ponmudi R, CEO of Enrich Money, attributed a sudden late-stage sell-off to MSCI index rebalancing adjustments, triggering substantial institutional selling. Domestic institutional investors (DIIs) provided some cushion, recording cumulative net inflows of approximately Rs 25,800 crore, absorbing a significant portion of foreign selling.
Vinod Nair, Head of Research at Geojit Investments Ltd, highlighted a bifurcated performance, with midcaps nearing all-time highs while large caps lagged. Domestic sentiment was also impacted by the India Meteorological Department’s below-normal monsoon forecast, raising fears of food inflation and contributing to broad-based selling into the weekend close.
Key Levels to Watch for Monday, June 1
Nifty
- Support: Mishra indicated that Friday's sharp fall pushed the Nifty towards a recent swing low of 23,250 and a gap area at 23,150. A sustained breach below these levels could intensify corrective pressure, potentially reaching 22,800. Ponmudi placed immediate support slightly higher at 23,500.
- Resistance: Analysts largely agree on the immediate upside hurdles. Mishra expects the 23,800–24,000 zone to act as stiff resistance, while Ponmudi pegs immediate resistance at 23,750–23,800, with the broader 24,000–24,100 range remaining a major hurdle.
Sensex
- Support: According to Ponmudi, the 30-share index finds its immediate support in the 74,500–74,200 zone.
- Resistance: On the upside, immediate resistance lies near the 75,800–76,000 zone, with 76,500–76,700 acting as a broader supply area.
Trading Strategy
Given the heightened event-driven volatility, Mishra advised maintaining a cautious yet selective approach. He stressed that traders should avoid excessive leverage and implement disciplined risk management practices. A hedged and stock-specific approach is preferable until clearer market signals emerge.
Ponmudi suggested that investor positioning will likely remain selective and cautious, with confidence contingent on tangible diplomatic progress and continued stability in energy and currency markets. Nair added that building large-cap conviction for the market's next leg higher will require confirmation through policy clarity, monsoon normalization, and geopolitical de-escalation, alongside the upcoming RBI monetary policy decision and India's GDP data release.