Dalal Street This Week: US, India inflation, US-India trade talks among 10 key factors to focus on

Nifty Upward Journey

The market clocked one percent gains amid tariff concerns and geopolitical escalations for the week ended June 6, following weakness in the previous two weeks. All the credit goes to the Reserve Bank of India which surprised with announcements of 50 bps repo rate cut (against 25 bps expectations) to 5.5 percent (taking the total to 100 bps cut in 2025) to support the economic growth when the inflation remained well below 4 percent target, and 100 bps cut in cash reserve ratio to boost liquidity in the system, while shifting policy stance to neutral from accommodative.

This week (starting from June 9) is expected to maintain a positive bias supported by the RBI move and optimism with respect to India-US trade deal talks. However, unexpected shifts in US tariffs and ongoing geopolitical tensions may bring some volatility to the market, according to experts. Furthermore, the focus would be on the monthly inflation numbers from the US and India, along with FII interest in equities.

The Nifty 50 closed tad above the 25,000 mark, at 25,003, up 252 points, while the BSE Sensex climbed 738 points to 82,189. The broader markets outperformed the benchmark indices significantly, with the Nifty Midcap 100 and Smallcap 100 indices gaining 2.77 percent and 3.91 percent, respectively. Rate-sensitive sector Nifty Realty surged 9.51 percent for the week, followed by banking & financial services, and auto among others.

Siddhartha Khemka, Head - Research, Wealth Management at Motilal Oswal Financial Services expects Indian markets to witness a gradual up-move, supported by positive sentiment following higher-than-anticipated rate cut by RBI and optimism surrounding a potential US-India trade agreement with officials from both sides meeting in New Delhi this week (starting from June 9) to finalise the first phase of the proposed deal.

Meanwhile, global headwinds, including unexpected shifts in US tariffs and ongoing geopolitical tensions, may induce volatility, according to him.

Further, he believes apart from rate-sensitive sectors, monsoon-linked sectors such as fertilizers, agro-chemicals, rural finance, and two-wheelers will be in focus, backed by forecasts of an above-average monsoon in 2025.

Vinod Nair, Head of Research at Geojit Investments is also of the view that while China's rare earth restrictions pose long-term risks and investors await the inflation print in the US, the aggressive RBI rate cut, backed by cooling inflation and a steady GDP outlook, is likely to support investor confidence amidst the ongoing global uncertainties."

Here are 10 key factors to watch for this week:

CPI Inflation

The market participants will keep an eye on the CPI inflation numbers scheduled to be released on June 12, which is an important data point for the RBI for making interest rate decisions. Most economists see inflation below 4 percent (the RBI target) at least for the current year 2025. As per the RBI forecast of last week, the CPI inflation for the full year (FY26) has been revised downward to 3.7 percent from 4 percent earlier, with 2.9 percent for Q1FY26 (against earlier estimates of 3.6 percent), 3.4 percent for Q2 (against 3.9 percent) and 3.9 percent for Q3 (against 3.8 percent).

Further, balance of trade data for May, and foreign exchange reserves for the week ended June 6 will also be released this week on June 13.

US Inflation

On the global front, investors will focus on the US inflation print, which will be released on June 11. According to global economists, inflation and core inflation are likely to inch higher a bit for the month of May, compared to 2.3 percent and 2.8 percent in the previous month, respectively, and may be impacted by tariff rates.

Apart from that, PPI for May and weekly jobs data will also be watched.

Global Economic Data

The coming week will also see China's inflation, PPI, and vehicle sales data for May. Japan is also set to announce its January-March quarter GDP numbers along with PPI.

US-India trade agreement Developments

Apart from economic data, the market participants will focus on further developments with respect to US-China trade talks as both countries aim to lower tariff and non-tariff barriers and boost the supply chain. Reuters, quoting government sources, reported that the trade talks between Indian and US officials have been extended into this week as both sides seek consensus on tariff cuts in the farming and auto sectors, aiming to finalise an interim deal before a July 9 deadline.

FII Flow

Meanwhile, the mood at foreign institutional investors (FIIs) desks will also be checked as they remained net sellers last week to the tune of Rs 3,566 crore (continuing outflow for the third consecutive week), making the negative start to June, after strong buying in May. However, domestic institutional investors (DIIs) compensated the FII outflow by a significant margin, giving strong support to the equity market, as they have net bought Rs 25,513 crore worth of shares last week, maintaining consistent inflow since August 2023.

The US dollar index was down by 0.24 percent for the week to 99.202 levels, sustaining below all key moving averages, while the US 10-year Treasury yield increased by 2.5 percent to 4.508 percent.

IPO

The primary market will see four IPOs opening this week, including one from the mainboard segment. The Oswal Pumps IPO will hit Dalal Street on June 13, while from the SME segment, the initial public offering of Sacheerome will open for subscription on June 9, followed by Jainik Power and Cables on June 10 and Monolithisch India on June 12.

Further, Ganga Bath Fittings will be only listing this week, making its debut on the NSE Emerge on June 11.

Technical View

Technically, the market is looking better especially after previous two weeks' sell-off as with Friday's strong move, the Nifty 50 traded well above all key moving averages (10, 20, 50 and 200-week EMAs) with good volumes and all these moving average lines trended higher with positive crossover in MACD and RSI.

The Bollinger bands expanded on both sides, with the upper line giving a target of 25,300. Overall, the 25,000 is expected to be the crucial zone for the index, as sustaining above it can open doors for 25,200 and 25,500 levels. However, the support is placed at the 24,800 levels, followed by 24,500 being the crucial support, according to experts. The index is on the verge of falling resistance trendline breakout, as above it, strong upside can't be ruled out.

F&O Cues

The weekly options data suggested that the 25,000 is expected to be key zone for further directional trade in the Nifty 50 with resistance at 25,500 and support at 24,800-24,700 levels.

The maximum Call open interest was placed at the 26,000 strike, followed by the 25,500 and 25,000 strikes, with the maximum Call writing at the 25,500 strike, followed by the 25,600 and 26,000 strikes. On the Put side, the 25,000 strike holds the maximum open interest, followed by the 24,700 and 24,800 strikes, with the maximum Put writing at the 25,000 strike, and then the 24,900 and 24,600 strikes.

India VIX

The volatility index, India VIX, that measures the expected market volatility, extended a downtrend for a second consecutive week and fell below the 15 mark, making the bulls more comfortable now. Sustaining below a 15 mark can give further comfort. It closed at 14.63 levels, down 9 percent during the week and falling below all key moving averages.

Corporate Action

Here are key corporate actions for the coming week:

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