Flat opening seen as market awaits fresh triggers

Domestic markets are likely to remain volatile amid lack of domestic triggers. The focus has now shifted to the RBI monetary policy outcome that will be revealed on Friday, at the end of the central bank’s three-day deliberations. According to analysts, the market has already discounted a 25 bps rate cut.

Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd, said: Optimism over a potential RBI rate cut has been offset by global concerns around trade tariffs and rising geopolitical tensions. Attention is likely to shift towards monsoon-linked themes and interest rate-sensitive sectors such as PSU banks and real estate, amid hopes that monetary easing could support economic momentum.

Gift Nifty is currently ruling at 24,725, while Nifty June futures on Tuesday closed at 24,675, indicating marginal gains for Nifty.

Meanwhile, Emkay Global Research, in a note said it met with a wide range of policy voices during a recent three-day trip to Delhi. “There is strong optimism about the imminent trade deal with the US, with Phase-1 likely by early July. There seems to be better preparedness to capture a large chunk of the global pie, as global trade and supply chains reset again. On growth, while conventional policy levers are limited, significant policy efforts at the federal level are underway to ease bottlenecks in the factors of production, and enhance India’s investment climate and share in global value chains (GVCs). Fiscal conservatism is also seen as having helped ease corporate costs. Although current growth-inflation dynamics are conducive for monetary easing, lags and constraints in transmission to the real economy remain a policy concern,” the domestic brokerage said.

However, the derivative market still signals bearish outlook.

According to Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities, the options data reflects a bearish undertone. Call writers have been adding significant open interest at near-the-money strikes, while put writers are gradually shifting lower, signalling caution.

“The Put-Call Ratio (PCR) has dropped from 0.67 to 0.49, entering oversold territory. While this signals heightened bearish sentiment, it also opens the possibility for short covering in the near term. Max Pain is currently pinned at 24,650, suggesting that option sellers expect the expiry to centre around this level.,” he said.

Meanwhile,  India VIX, the volatility index, eased by 3.51 per cent to 16.55, yet remains above the psychological comfort zone of 15. “The elevated VIX levels continue to reflect underlying market uncertainty and indicate the potential for erratic, whipsaw-driven price action in the sessions ahead,” he further said.

Capital market stocks are expected to remain in the spotlight, with improved liquidity across the board, driven by a surge in retail investor participation, renewed FII inflows, and growing optimism around domestic equities, said Khemka. “With the Q4 earnings season largely behind us, markets are expected to remain in a consolidation phase as participants shift focus to key macro trends and global cues,” he added.

Published on June 4, 2025

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