Market outlook for the week (02-Jun to 06-Jun)

2 Jun 2025 , 09:49 AM

SECTORAL STORY FOR THE WEEK TO MAY 30, 2025

The week to May 30, 2025 saw Nifty and Sensex losing -0.41% and -0.33% respectively. During the week, FPIs were net buyers in Indian equities worth $705 Million; due to a surge of buying on Thursday. Here are 20 key sectors for the week.

Sectoral Index	Weekly Returns	Index (30-May)	Index (23-May)
Nifty PSU Banks	4.08%	6,976.00	6,702.70
Nifty Capital Markets	3.35%	4,254.80	4,116.95
Nifty India Defence	2.73%	8,685.60	8,454.95
Nifty Realty	1.33%	949.35	936.85
Nifty Non-Banks	0.88%	29,176.05	28,922.75
Nifty Banks	0.63%	55,749.70	55,398.25
Nifty Chemicals	0.19%	30,160.49	30,102.01
Nifty MNC	0.19%	28,115.80	28,063.15
Nifty India Digital	0.00%	8,758.50	8,758.30
Nifty Private Banks	-0.16%	27,576.65	27,621.35
Nifty IT	-0.22%	37,321.75	37,403.55
Nifty Infrastructure	-0.41%	8,970.35	9,007.20
Nifty Mobility	-0.50%	20,314.90	20,417.65
Nifty Metals	-0.61%	9,193.25	9,249.60
Nifty Healthcare	-0.65%	13,890.40	13,980.80
Nifty Oil & Gas	-0.69%	11,388.40	11,467.50
Nifty Consumer Durables	-0.77%	37,359.00	37,648.50
Nifty Automobiles	-0.81%	23,325.60	23,515.25
Nifty CPSE	-1.23%	6,450.60	6,530.75
Nifty FMCG	-2.16%	55,283.00	56,502.05

Data Source: NSE

Out of 20 key sectors, 9 sectors gave positive returns while 11 sectors gave negative returns for the week. PSU Banks, Capital Markets, Defence, and Realty; were the clear gainers, akin to last week. Defence continued to gain on order flows, while PSU banks gained on hopes of an imminent disinvestment. Out of the 9 gaining sectors, 4 sectors gained over 1%.

Overall, average returns of the 20 sectors stood at 0.26%. The top 5 sectors delivered 2.47% returns, while top 10 sectors gave average returns of 1.32%. However, the bottom 10 sectors delivered -0.80% on average. FMCG, Automobiles, and Consumer durables were the heavyweight sectors that came under pressure.

WEEK THAT WAS; THE GOOD, THE BAD AND THE UGLY

On the positive side, the Q4FY25 GDP growth came in higher than expected at 7.4%, leading to full year GDP growth at 6.5%. While manufacturing came under pressure, services were flat and agriculture was sharply better than FY24. The other big positive was fiscal deficit contained at 4.77% of GDP for FY25, against the target of 4.8%. Now 4.4% for FY26 looks realistic. In the US, while GDP contracted, the PCE inflation is now down to 2.1%.

On the downside, the India IIP growth for April tapered to 2.7%, compared to 3.9% in March. However, April saw a massive upward revision, so the field is still open for May data to improve. Fed minutes hinted at no rate cuts till September, so the conflict with POTUS is likely to continue. But the big disappointment was the US decision to hike tariffs on steel and aluminium from the current 25% to 50%, which will hit Indian steel companies too.

STOCK MARKET TRIGGERS FOR COMING WEEK TO JUNE 06, 2025

Here are key triggers that could influence stock markets next week.

• The monetary policy announcement will be made by the RBI on Friday. Broadly, the RBI is expected to cut repo rates by 25 basis points, making it 75 bps in the last 3 policy statements. However, the language may indicate a pause after the June cut.
• The big news this was about Trump doubling auto import tariffs from 25% to 50%. That is likely to make auto exports to the US prohibitively expensive. One has to await the reaction of JLR and others; but auto sector is likely to be hit badly by this move.
• Crude oil prices will be in focus ahead of the OPEC Plus meet in the coming week. OPEC Plus is expected to substantially expand its supply by more than 4.11 Lakh bpd in May and June (as stated earlier). Oil fell to $62/bbl and could stay under pressure.
• US unemployment numbers will be announced by the Bureau of Labour Statistics (BLS) this week, and it is likely to remain static at 4.2%. The focus will be on the non-farm payroll additions, although Fed is unlikely to take any decision on rates for now.
• Key global data points. FOMC Speak, Unemployment, Atlanta Fed GDP, PMI, Factory Orders, JOLTS, Crude stocks, Biege Book, and Trade Deficit (US). PMI, CPI, ECB Rates decision (EU); Capital Spending, PMI, Household Spending (Japan); PMI (China); and HPI, PMI, MPC Speak (UK).

What does this mean for Nifty and Sensex levels in the coming week to June 06, 2025.

PARTING THOUGHTS ON NIFTY AND SENSEX LEVELS

VIX fell sharply from 17.28 levels to 16.08, as bond market uncertainty faded compared to the previous week. Further tapering of VIX looks unlikely at this point.

• Nifty closed the week at 24,751 Spot. Nifty has immediate support at 24,691 and major support at 24,544. Immediate resistance is at 24,837 and later at 25,984. Nifty remains a long trade, unless it breaks below 24,677 with volumes. Shorts only below that!
• Sensex closed the week at 81,451 Spot. Sensex has immediate support at 81,259 and major support at 80,847. Immediate resistance is at 81,671 and later at 82,082. Sensex remains a long trade, till it breaks below 81,151 with volumes. Shorts only below that!

The focus shifts to a slew of big macros next week; including the RBI monetary policy and the US unemployment rate. For a longer perspective; markets will focus on the Fed policy statement and the quarterly macro update towards the middle of June, as well as the India CAD data towards the end of June. For now, the bigger battle of perception in markets, will focus on the US doubling import tariffs on automobiles!