Indian stock markets are poised for an interesting trading session on June 6, 2025, as participants keenly await the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) decision. Both the Nifty 50 and Sensex have shown positive momentum recently, but the RBI's policy announcement is expected to be a key driver influencing market direction.

Global and Domestic Cues

Early indications suggest a tepid start for the Indian benchmark indices. GIFT Nifty was trading around 24,841, indicating a discount of nearly 20 points from the Nifty futures' previous close. This points to a potentially flat opening. However, gains across European indices and firm U.S. futures reinforce bullish sentiment.

RBI Policy in Focus

The highlight of the day will undoubtedly be the RBI's monetary policy decision, expected to be announced by Governor Sanjay Malhotra. The MPC is widely anticipated to deliver a 25 basis points (bps) repo rate cut, bringing it down to 5.75% from 6%. This expectation of a rate cut has already contributed to improved investor sentiment. Some experts even suggest the possibility of a larger 50 bps cut to stimulate lending and economic activity.

A rate cut is generally expected to have a positive impact on the stock market, particularly in rate-sensitive sectors like banking, real estate, and automobiles. Lower borrowing costs can stimulate consumer demand and encourage corporate investments.

Market Volatility and Investor Sentiment

Volatility has eased, with the India VIX index declining, signaling reduced hedging demand and improving investor confidence ahead of the RBI's policy decision. The India VIX fell nearly 5% intraday to a low of 14.98 on June 5, before partially recovering to 15.27.

Nifty and Sensex Technical Outlook

• Nifty 50: The Nifty 50 witnessed a modest upside bounce recently, closing higher. According to VLA Ambala, Co-Founder of Stock Market Today, the index formed an inside bar or bullish Harami candlestick pattern on the daily timeframe, indicating potential upward momentum. Shrikant Chouhan, Head of Equity Research at Kotak Securities, believes that a decisive move above 24,900 could offer short-term resistance for the Nifty. Immediate support is placed at 24,700 and 24,500 strike prices.
• Sensex: The Sensex is currently trading near the 20-day SMA (Simple Moving Average). Shrikant Chouhan believes that 81,000 would act as a key support zone for traders. As long as the Sensex trades above this level, bullish sentiment is likely to continue, potentially pushing the index towards 82,000 - 82,200. However, a breakdown below 81,000 could trigger selling pressure, with the index potentially slipping to 80,100 - 80,000. Jigar Patel from Anand Rathi Stock Broking suggested that the key levels to watch are resistance at 81,800 and support at 81,000.

Bank Nifty

The Bank Nifty index has been consolidating ahead of the RBI monetary policy outcome. Market analysts indicate strong resistance at 56,000-56,100 levels. A decisive breakout above 56,100 with strong volume could trigger a rally toward the 56,800–57,200 zone. Immediate support is placed at 55,600 followed by psychological support of 55,500.

Sectoral Focus

Besides banking, real estate, and automobiles, other sectors that may see heightened activity include pharma and realty. Nifty Realty, Pharma, and Healthcare indices emerged as top gainers recently. Smallcap stocks have also shown strong performance, fueled by robust investor interest in broader market opportunities.

Important Factors to Watch

• RBI Policy Outcome and Commentary: The market will be closely watching the RBI's decision on interest rates, as well as its commentary on inflation, growth, and liquidity.
• Global Market Cues: Developments in global markets, including U.S. economic data and trade negotiations, could also influence Indian stock market sentiment.
• Rupee Movement: The rupee's movement against the US dollar can also impact market sentiment.

Overall, the Indian stock market is expected to be driven by the RBI's policy announcement. While expectations of a rate cut have created a positive bias, the central bank's outlook on key economic indicators and global uncertainties will be crucial in determining market direction.