The Indian stock market experienced a cautious start today, June 6, 2025, ahead of the Reserve Bank of India's (RBI) monetary policy decision. Early trading saw both the Sensex and Nifty indices dipping into the red. The BSE Sensex was down by approximately 150 points, hovering around 81,300, while the Nifty 50 was trading below the 24,750 mark.
Several factors contributed to this market sentiment. Investors are primarily awaiting the outcome of the RBI's Monetary Policy Committee (MPC) meeting, which is expected to be announced shortly. The MPC's decision will likely set the tone for the market in the near term, especially concerning the repo rate.
Market analysts widely anticipate a 25 basis points (bps) cut in the repo rate, potentially bringing it down to 5.75% from the current 6.00%. If materialized, this would be the third consecutive repo rate cut by the RBI, signaling a continued accommodative stance aimed at boosting economic growth amid global uncertainties. The central bank had already reduced the repo rate by 25 bps each in February and April of this year.
The expectation of a rate cut stems from the current macroeconomic indicators. Retail inflation has been softening and is currently within the RBI's comfort zone of 2%-4%. Lower food and crude oil prices further support a favorable inflation outlook. The MPC is also expected to maintain or reinforce its accommodative stance, indicating a willingness to consider further rate cuts if necessary to support economic growth.
From a technical perspective, the Nifty has recently regained its level above the 20-day EMA (Exponential Moving Average), suggesting a potential strengthening of the underlying trend. The index seems to have established a strong base near 24,500. However, the 24,900 level could act as a short-term resistance for the Nifty.
Individual stock performances varied. Bajaj Finserv, Bajaj Finance, ICICI Bank, Tata Motors, HCL Tech, Infosys, Reliance Industries, TCS, and Sun Pharma were among the top laggards, limiting the upside potential of the indices. On the other hand, certain sectors showed positive momentum, with the Nifty Metal and Nifty Realty indices gaining, while Nifty Auto and Nifty Financial Services were in the red.
Broader market indices, such as the Nifty MidCap and Nifty SmallCap, were edging higher, indicating continued outperformance compared to the benchmark indices. The Nifty Small-cap index, in particular, continued its upward trend for the fourth consecutive day, reaching a four-month high.
Globally, U.S. markets experienced a downturn, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all posting losses. Concerns over potential policy changes and their impact on key sectors, particularly technology, weighed on investor sentiment.
Overall, the Indian stock market is exhibiting a cautious stance ahead of the RBI's policy announcement. The anticipated repo rate cut is expected to provide some impetus to the market. However, global cues and domestic factors will continue to play a crucial role in shaping market trends. Investors will be closely monitoring the RBI's policy statement for further insights into the central bank's outlook on economic growth and inflation.
