Indian markets enter the new week on a cautious note after a weak close in the previous holiday-shortened week. The NIFTY50 slipped 0.7% to end at 23,547, while the SENSEX fell 0.8% to 74,775. Indices were weighed down by persistent FII selling, MSCI rebalancing-led outflows, profit booking in heavyweights and uncertainty around U.S.-Iran negotiations.
However, the broader market continued outperformance relative to benchmark peers.The NIFTY Midcap 150 (+0.3%) and Smallcap 250 (+1.2%) indices extended gains for the second straight week. The rupee also remained in focus after extending gains for the second consecutive week. It appreciated by 70 paise to settle at 95 per U.S. dollar, supported by easing crude oil prices.
Sectorally, the market trend was mixed during the week. PSU Banks, Energy and Metal were the top gainers, gaining around 1% each.On the other hand, Oil & Gas, FMCG and Pharma declined 1-1.5%
Spotlight: NIFTY Pharma has moved back into the spotlight after a strong monthly close. The index gained over 4% in May. Recent Q4 earnings from key pharma companies show that the sector is seeing support from better operating performance, margin improvement, new launches and specialty products. Lupin reported a sharp jump in Q4 profit, helped by strong US sales, forex gains and margin expansion. Sun Pharma’s FY26 performance was supported by its innovative medicines portfolio, while Zydus also reported profit growth despite pressure in North America formulations. Technically, the index remains comfortably above its 20-month, 50-month and 200-month EMAs, showing that the broader trend remains positive.
️Key events in focus: The biggest event for the week will be the RBI policy outcome on June 5. Markets will closely track the central bank’s commentary on inflation, crude oil prices, rupee weakness and liquidity. While the street largely expects the RBI to keep rates unchanged, the tone of the policy will be important after the recent volatility in crude and currency markets.
Globally, the focus will be on U.S. jobs data. The week will see key releases such as weekly jobless claims and non-farm payrolls. These numbers will shape expectations around the U.S. Federal Reserve’s rate path and may influence bond yields, dollar index and FII flows.
️Crude oil: Crude oil prices cooled sharply during the week as investors tracked progress on a possible U.S.-Iran deal and the reopening of the Strait of Hormuz. Brent and WTI fell over 10% and settled at their lowest levels in over a month. The fall in crude is positive for India as it reduces pressure on inflation, the current account deficit and the rupee. However, the risk has not fully gone away. Any delay in the U.S.-Iran deal or fresh disruption around the Strait of Hormuz could again lead to volatility in crude prices.
⏰F&O closing time extended: NSE will extend the normal market closing time for equity derivatives by 10 minutes to 3:40 PM from August 3 as part of the Closing Auction Session rollout. The move is aimed at aligning derivatives trading with the new cash market closing auction mechanism and improving price discovery at the close.
Market breadth
Market breadth cooled during the week after a sharp recovery seen through April and May. The share of NIFTY50 stocks trading above their 50-DMA slipped from the recent high of nearly 80% to around 55-60%. This shows that participation has moderated after the recent rally. However, breadth still remains above the neutral 50% mark, suggesting that the market has not turned weak internally yet.
Foreign investors positioning
Foreign investors remained net sellers, offloading equities worth ₹23,782 crore during the week. The selling was partly driven by MSCI rebalancing-led outflows. In the derivatives market, FIIs continue to remain heavily positioned on the short side. Their index futures long-to-short ratio remains weak, indicating that foreign investors are still not taking aggressive bullish bets on Indian equities.
NIFTY50 outlook
The NIFTY50 index ended the week on a weak note and slipped below the 23,800 zone, which had acted as an important short-term level in the previous sessions. The index also closed below its 20-DMA and 50-day EMA, showing that momentum has weakened again.
For the week ahead, the 23,800-23,850 zone will act as the immediate resistance. A close above this range will be the first sign of strength. Until then, recovery attempts may face selling pressure at higher levels.On the downside, 23,100 is the immediate support to watch. A break below this level could extend weakness.
