Nifty Weekly Analysis

Nifty Weekly Analysis: Navigating Global Currents and Domestic Tailwinds for the Week Ahead

I. Executive Summary: Nifty's Week Ahead – Key Drivers & Outlook

The Indian equity market, particularly the Nifty 50 index, commences the new trading week exhibiting substantial bullish momentum. The index has decisively surpassed the critical 25,000 mark, a development largely attributable to the Reserve Bank of India's (RBI) unexpectedly assertive monetary policy adjustments. This domestic stimulus is further bolstered by a supportive global environment characterized by a tentative de-escalation in trade tensions and a prevailing risk-on sentiment across international equities.

The primary impetus for this positive trajectory stems from domestic factors. The RBI's significant 50 basis points (bps) reduction in the repo rate and a concurrent 100 bps cut in the Cash Reserve Ratio (CRR) are anticipated to substantially enhance systemic liquidity and foster credit expansion, directly benefiting rate-sensitive sectors.1 Furthermore, the projected revival of the southwest monsoon between June 12 and 18 3, coupled with resilient domestic consumption patterns 5, reinforces this optimistic outlook. A crucial underlying support for the market continues to be the robust buying activity from Domestic Institutional Investors (DIIs), which has effectively absorbed selling pressure from foreign counterparts.6

Globally, the easing of trade frictions between the United States and China, evidenced by renewed negotiations and reciprocal tariff reductions, contributes positively to global liquidity and overall risk appetite.8 The European Central Bank's (ECB) recent interest rate reduction also signals a move towards looser global monetary conditions.10 This confluence of factors has contributed to a broad-based rally in global equities, with major indices reaching new highs, creating a favorable spillover effect for emerging markets like India.12

Despite these strong tailwinds, certain challenges and watchpoints merit close attention. Persistent selling by Foreign Institutional Investors (FIIs) in both the Indian cash and derivatives segments could temper upward movements.6 Upcoming US inflation data, scheduled for release on June 11 13, and the US Federal Reserve's (Fed) cautious "wait-and-see" approach to monetary policy 15 could influence global capital flows and potentially lead to a strengthening of the US dollar. Additionally, China's recent manufacturing slowdown 16 and the upward trend in crude oil prices 18 represent potential sources of volatility that could affect market sentiment.

Considering these dynamics, the Nifty is technically positioned for continued upward movement, with the 25,000 level now expected to serve as a robust psychological and technical support. Market participants will closely monitor forthcoming domestic inflation data and global economic indicators, particularly the US Consumer Price Index (CPI) release. A sustained breakthrough above immediate resistance levels could pave the way for new all-time highs. The overarching sentiment remains one of cautious optimism, suggesting a bullish bias for the Nifty in the immediate term.

II. Global Market Landscape: External Influences on Indian Equities

The performance of the Indian equity market is intrinsically linked to broader global economic and geopolitical developments. Understanding these external forces provides essential context for predicting the Nifty's trajectory.

A. Major Central Bank Policies

Global central bank actions play a pivotal role in shaping liquidity and investor sentiment worldwide. Divergent policy paths among major economies can significantly influence capital flows and currency valuations.

The European Central Bank (ECB), on June 5, 2025, implemented a notable shift in its monetary policy by reducing its three key interest rates by 25 basis points.10 This decision reflects the ECB's assessment that inflation is stabilizing around its 2% target, while the Eurozone economy continues to face external pressures from global uncertainties and trade tensions.10 The ECB's latest projections indicate a gradual recovery for the euro area, with growth averaging 0.9% in 2025, accelerating to 1.1% in 2026, and 1.3% in 2027. Inflation is projected to average 2.0% in 2025, before declining to 1.6% in 2026 and then returning to 2.0% in 2027.11 The Governing Council emphasized its commitment to a data-dependent, meeting-by-meeting approach, explicitly stating that it is "not pre-committing to a particular rate path".11 This dovish stance by a major global central bank contributes to an environment of increased global liquidity. When a significant economy like the Eurozone eases its monetary policy, it can make its assets relatively less attractive for yield-seeking investors. This dynamic may encourage capital to flow towards higher-yielding markets, including emerging economies like India, thereby generally supporting risk assets and potentially benefiting the Nifty.

In contrast, the US Federal Reserve (Fed) maintained its benchmark interest rates within the 4.25% to 4.5% range during its May 2025 meeting, adopting a "wait-and-see" approach regarding future rate adjustments.15 Fed Chair Jerome Powell indicated that the current policy setting is "in a good place," allowing the central bank flexibility to respond to evolving economic conditions. The Fed's assessment noted modest economic growth, with inflation slightly above its 2% target. It also highlighted robust labor market conditions and consistent consumer spending, despite some reported weakening in general sentiment data.15 The next Federal Open Market Committee (FOMC) meeting, which will include an updated Summary of Economic Projections, is scheduled for June 17-18, 2025.20 This divergence in monetary policy, where the ECB is easing while the Fed holds steady, could lead to a strengthening of the US dollar against the Euro. A stronger dollar typically enhances the appeal of dollar-denominated assets and can exert appreciation pressure on emerging market currencies, such as the Indian Rupee. While this might make imports more expensive for India, the Fed's decision to hold rates, rather than tightening them, is broadly supportive of global risk appetite, preventing a significant global risk-off event that could negatively impact the Nifty.

B. Key Global Economic Data

Upcoming global economic data releases are critical for shaping market expectations and influencing investor behavior.

US inflation figures are under close scrutiny. The Consumer Price Index (CPI) for All Urban Consumers increased by 2.3% year-over-year in April 2025, a marginal decrease from 2.4% in March. The core CPI, which excludes volatile food and energy components, rose by 2.8% over the same 12-month period.14 The highly anticipated May 2025 CPI data is scheduled for release on June 11, 2025, at 8:30 A.M. Eastern Time.13 Preliminary Purchasing Managers' Index (PMI) data have suggested a potential increase in US price pressures, partly attributed to the effects of higher tariffs.22 The upcoming US CPI data is a pivotal market mover. Should this data, particularly core inflation, indicate a re-acceleration of price increases, it could further delay expectations for Fed rate cuts. Such a scenario would likely maintain upward pressure on US Treasury yields and potentially lead to a stronger dollar, fostering a global risk-off sentiment that could adversely affect emerging markets like India.

For the Eurozone, inflation data for May 2025, based on preliminary estimates, eased to 1.9% year-on-year. This marks a decline from 2.2% in April and represents the first time inflation has fallen below the ECB's 2.0% target since September 2024.23 A significant factor in this deceleration was a sharp slowdown in services inflation, which dropped to 3.2% from 4.0% in April.23 The final data for May 2025 is scheduled for release on June 18, 2025.23 This clear disinflationary trend in the Eurozone, with inflation moving below the ECB's target, validates the recent rate cut and suggests that further easing measures might be considered if this trend persists. This narrative of easing price pressures in Europe contrasts with potential inflationary pressures in the US, contributing to the observed policy divergence between the two major central banks.

China's economic data also presents a mixed picture. The official National Bureau of Statistics (NBS) Manufacturing PMI for May 2025 showed a slight increase to 49.5, though remaining in contractionary territory. In contrast, the Caixin Manufacturing PMI for May 2025 sharply declined to 48.3 from 50.4, marking its lowest point since September 2022 and its first contraction in eight months.16 The Caixin data, which primarily focuses on small to medium-sized enterprises (SMEs) and the private sector, points to a significant weakening in manufacturing activity, particularly concerning export orders.16 Reports indicate that Chinese authorities are contemplating additional stimulus measures.25 The sharp contraction in China's private sector manufacturing, as indicated by the Caixin PMI, underscores underlying weaknesses in the world's second-largest economy. This signals potentially weak domestic and global demand, which could impact commodity prices and global trade. While a slowdown in China could be a drag on global growth, the promise of more stimulus suggests the government's concern and potential for future support, which could mitigate the severity of the slowdown.

Table 1: Global Economic Calendar (June 9-15, 2025)

C. Geopolitical & Trade Dynamics

Geopolitical and trade developments introduce significant uncertainty into global markets, necessitating dynamic risk management.

US-China trade tensions have seen a temporary reprieve. Following a "very positive" phone call between President Trump and Chinese leader Xi Jinping, both nations have agreed to resume trade talks.8 As a conciliatory gesture, the US temporarily reduced its additional ad valorem tariffs on Chinese goods from 145% to 30% for a 90-day period. China reciprocated by lowering its taxes on US goods from 125% to 10%.8 While these steps offer immediate relief to global markets, underlying tensions persist. The US continues to aim for reduced reliance on Chinese manufacturing, while China is determined to advance its capabilities in critical technologies such as electric vehicles and artificial intelligence.8 The historical unpredictability of US trade policy, exemplified by past "Tariff Tuesday" announcements that have blindsided markets, suggests that trade relations remain a significant source of potential volatility.26 The resumption of trade talks and reciprocal tariff reductions generate immediate positive sentiment for global markets, which generally supports the Nifty. However, the unresolved fundamental economic competition and the history of abrupt policy shifts imply that the sustainability of this détente is uncertain. Investors should remain cautious, as core issues are yet to be resolved, and the risk of renewed tensions remains.

The broader geopolitical landscape is characterized by an increasing "velocity of risk," demanding more dynamic risk management approaches from financial institutions.26 Several upcoming events contribute to this environment. South Korea is scheduled to hold a snap presidential election on June 3, 2025, an outcome that could alter its foreign policy stance, particularly concerning the US-China strategic rivalry and North Korea.27 The Netherlands will host the NATO summit in The Hague from June 24-26, where discussions will focus on negotiating increased defense spending among member states, with a proposed target range of 3.5% to 5% of GDP.27 Additionally, Mexico will conduct its first judicial elections on June 1, 2025, following a constitutional overhaul of its judiciary.27 The increasing pace and breadth of geopolitical risks mean that markets must be prepared for rapid policy shocks and retaliatory measures. While specific regional events might have localized impacts, the broader theme of fragmentation and increased defense spending points to continued global uncertainty. This general uncertainty can lead to periods of risk aversion, potentially influencing capital flows to emerging markets, including India, even if directly unrelated to Indian fundamentals.

D. Global Commodity Trends

Commodity price movements, particularly crude oil, have direct implications for India's economy.

Crude oil prices saw a significant increase last week, with West Texas Intermediate (WTI) crude rising by 6.16% to close at $64.67 per barrel on June 6, 2025.18 Daily price data during the week showed fluctuations, with a high of $64.80 recorded on June 5.19 Rising crude oil prices represent a potential headwind for India, given its status as a net oil importer. Higher energy costs can contribute to domestic inflation, exacerbate the current account deficit (CAD), and negatively impact the profitability of energy-intensive sectors within the Indian economy. This can also indirectly affect consumer spending due to increased fuel costs for households.

Gold prices experienced a modest decline last week. The spot price of gold (XAU/USD) was $3,311.37 per ounce on June 7, 2025, marking a 1.26% decrease for the week.28 This short-term dip is largely attributed to stronger-than-expected US non-farm payroll data, which reduced the perceived likelihood of imminent Fed rate cuts, thereby strengthening the dollar and briefly weighing on gold prices.28 However, the long-term appeal of gold as a safe-haven asset remains robust. Global central banks are projected to acquire approximately 1,000 metric tons of gold in 2025, continuing a four-year trend of strong demand.28 Gold continues to serve as a vital hedge amidst volatile economic trends and evolving geopolitical challenges.28 While gold's short-term dip reflects reduced immediate expectations for Fed rate cuts, the persistent central bank buying and strong safe-haven demand indicate that underlying market anxieties about global uncertainties persist. This suggests that investors remain cautious and are prepared to shift capital towards safe-haven assets during periods of heightened risk.

E. International Equity Performance

The performance of global equity markets provides a gauge of overall investor risk appetite and can influence sentiment in emerging markets.

Global equities, as measured by the MSCI All Country World Index, reached all-time highs last week, registering an impressive 20% gain since their April lows.12 This robust rebound is underpinned by solid economic fundamentals, the easing of trade tensions, and strong corporate earnings reports.12 US markets experienced broad gains last week, with the S&P 500 advancing by 1.5% and the Nasdaq by 2.18%.18 Large-cap, mid-cap, small-cap, and growth-oriented stocks all recorded positive returns. Sectorally, technology earnings surged by 20%, communication services by 33%, and consumer discretionary by 8%, collectively restoring investor confidence in these segments of the market.12 The strong performance of global equities, particularly the broad-based rally in the US market and robust earnings from key sectors like technology, signals a prevailing risk-on sentiment among international investors. This positive global mood creates a supportive backdrop for emerging markets such as India, potentially encouraging Foreign Institutional Investor (FII) inflows and reinforcing domestic bullishness.

III. Indian Market Dynamics: Domestic Catalysts & Performance

The Indian market's recent performance has been shaped predominantly by significant domestic policy actions and underlying macroeconomic resilience.

A. RBI's Monetary Policy Review

On June 6, 2025, the Reserve Bank of India (RBI) surprised market participants with a more aggressive monetary policy move than anticipated. The RBI's Monetary Policy Committee (MPC) decided to reduce the repo rate by 50 basis points (bps) to 5.5%, exceeding market expectations of a 25 bps cut.1 This marks the third consecutive rate reduction, resulting in a cumulative 100 bps cut since February, representing the steepest easing cycle since the pandemic.2 In addition to the rate cut, the RBI announced a 100 bps reduction in the Cash Reserve Ratio (CRR), a measure expected to inject approximately ₹2.5 lakh crore into the banking system through four tranches commencing in September.1

The MPC also opted to shift its policy stance from 'accommodative' to 'neutral'.2 This strategic adjustment aims to avoid excessive market speculation while preserving flexibility for future policy decisions based on evolving economic conditions. The RBI revised its FY26 inflation forecast downwards to 3.7% from 4%, while maintaining the real GDP growth forecast for FY26 unchanged at 6.5%.2 The RBI's aggressive easing, particularly the substantial CRR cut, represents a powerful liquidity injection that directly benefits the banking system and, by extension, the broader economy. The reduction in borrowing costs, such as home loan rates potentially starting near 7.5% from 8.25% previously, is expected to stimulate credit growth, consumption, and investment.2 This directly fuels demand in rate-sensitive sectors. The shift to a 'neutral' stance, despite the large cut, indicates a cautious optimism, suggesting that the RBI has provided significant stimulus but retains room to maneuver without pre-committing to a prolonged easing cycle. This policy is a strong positive for the Nifty, particularly for sectors that thrive on lower interest rates and increased credit availability.

B. Macroeconomic Health Check

India's macroeconomic indicators demonstrate underlying strength and resilience.

GDP growth for India stood at 6.2% until Q3 FY2025.5 Deloitte forecasts India's GDP to expand between 6.5% and 6.7% in FY2026, driven by robust domestic demand, supportive fiscal policies, and stable inflation.5 The International Monetary Fund (IMF) projects a 6.2% real GDP growth for 2025.31 Government spending, including direct tax exemptions announced earlier, is expected to stimulate consumer spending and business investment, potentially adding 0.6-0.7% to GDP growth in FY2026.5 India's economic growth remains robust and is increasingly underpinned by strong domestic demand and supportive fiscal policies. This internal resilience provides a fundamental buffer against global economic uncertainties, positioning India as an attractive long-term investment destination despite temporary external headwinds.

Regarding inflation, the IMF projects consumer prices in India to change by 4.2% in 2025.31 The RBI's recent downward revision of its FY26 inflation forecast to 3.7% from 4% signals growing confidence in price stability.2 The upcoming India CPI data for May is scheduled for release on June 12, 2025.22 Stable or moderating inflation provides the RBI with continued policy flexibility to support growth. A favorable CPI print on June 12 would reinforce the narrative of easing price pressures, potentially opening doors for further calibrated rate adjustments later in the year, even with the 'neutral' stance. This would further support market sentiment and corporate profitability.

The progress of the monsoon is a critical determinant of India's agricultural output and rural economy. The southwest monsoon, which had stalled since May 29 due to dry air intrusion, is anticipated to revive between June 12 and 18, 2025.3 The India Meteorological Department (IMD) expects robust rainfall across central India, parts of Maharashtra, and south peninsular India following this revival.4 The timely and adequate progression of the monsoon is crucial for India's agricultural sector, rural incomes, and overall economic stability. A strong revival, as forecasted, would alleviate concerns about food inflation and boost rural consumption, providing a significant positive impetus to the economy and supporting the Nifty's performance, particularly for sectors dependent on rural demand.

C. Institutional Flows

Institutional investor activity provides crucial insights into market sentiment and liquidity dynamics.

Foreign Institutional Investors (FIIs) were net sellers in the Indian market last week (June 1-7, 2025). In the cash segment, FIIs recorded net sales of ₹3,565.9 crore.6 In the derivatives segment, FIIs were net sellers by ₹11,552.4 crore.7 Overall, FIIs were net sellers across all segments by ₹15,918.7 crore last week.7 Despite strong domestic positives such as the RBI rate cut, FIIs continued to be net sellers. This behavior could be attributed to global factors such as the strengthening US dollar, the cautious stance of the US Fed, or profit-booking following the Nifty's recent rally. This indicates that global capital allocation decisions are still influenced by external dynamics, potentially capping the Nifty's upside and requiring close monitoring.

Conversely, Domestic Institutional Investors (DIIs) demonstrated robust buying activity. DIIs were strong net buyers in the cash segment by ₹25,513.5 crore.6 Furthermore, DIIs were net buyers in MF Equity by ₹9,531.4 crore 7, effectively absorbing the FII selling pressure. While the overall MF Total showed net selling, this was primarily due to large derivative and debt selling, with equity buying remaining strong.7 The consistent and robust DII buying highlights strong domestic liquidity and unwavering confidence in the Indian market's growth narrative. DIIs are acting as a crucial counter-balance to FII outflows, providing a significant floor to the market and indicating that domestic capital is readily available to support valuations and prevent sharp corrections. This makes the market more resilient to external shocks.

Table 4: FII & DII Net Activity (Last Week: June 1-7, 2025)

D. Nifty 50: Last Week's Performance & Sectoral Trends

The Nifty 50 index concluded the last week with a gain of 1.02%, settling at 25,003.05 on June 6, 2025. This marked a decisive breach above the psychological 25,000 level.1 Concurrently, the Sensex also surged by 0.91%, finishing the week at 82,188.99.32 This impressive rally was primarily ignited by the RBI's unexpected rate cut and CRR reduction, which significantly boosted overall market sentiment.1

From a sectoral performance perspective, rate-sensitive sectors were the primary beneficiaries, responding positively to the prospects of reduced borrowing costs and improved credit growth. Financial stocks, including Non-Banking Financial Companies (NBFCs) and small finance banks, experienced substantial gains. Notable performers included Shriram Finance (+5.65%), Bajaj Finance (+4.9%), IDFC First Bank (+7.11%), Axis Bank (+3.07%), and IndusInd Bank (+2.45%).1 The Nifty Realty index surged by over 4%, while the Metal, Auto, and Consumer Durables sectors each rose by more than 1%.2 Public Sector Undertaking (PSU) Banks are anticipated to continue their outperformance, and the Information Technology (IT) sector is showing early indications of a bottoming-out process.34 The Nifty Media index was the sole sectoral index to register a decline, falling by 1%.2 The concentrated rally in rate-sensitive sectors directly confirms the market's immediate positive reaction to the RBI's liquidity-boosting measures. This indicates that the market is rapidly pricing in the benefits of lower borrowing costs and an improved credit outlook for these segments, which are significant constituents of the Nifty. The broad market breadth, with advancing stocks outnumbering declining ones, suggests a healthy underlying sentiment extending beyond just a few large-cap companies.

E. Upcoming Key Domestic Data & Events

Several key domestic data releases and corporate earnings announcements are scheduled for the upcoming week, which could influence market sentiment.

Economic data releases for June 9-15, 2025, include:

• Wednesday, June 11: M3 Money Supply Year-over-Year (May).30
• Thursday, June 12: Inflation Rate Year-over-Year (May) 22, Inflation Rate Month-over-Month (May) 30, Passenger Vehicles Sales Year-over-Year (May).30
• Friday, June 13: Foreign Exchange Reserves (June 6) 30, Balance of Trade (May) 30, Exports (May) 30, Imports (May).30

The upcoming inflation data on June 12 is a crucial domestic determinant of market sentiment. Its release will either confirm or challenge the RBI's disinflationary outlook, which provided the basis for the recent rate cut. A favorable inflation print would reinforce the narrative of easing price pressures, potentially creating additional room for further calibrated rate adjustments by the RBI later in the year, even with the 'neutral' stance. Trade data will offer timely insights into India's external sector health amidst ongoing global trade uncertainties.

Corporate earnings announcements for June 9-15, 2025, primarily involve smaller-cap companies and are not direct Nifty 50 constituents.35

• June 9: Indrayani Biotech, Yashraj Containeurs, Hindustan Adhesives, Longview Tea Company, Simbhaoli Sugars.35
• June 10: Pg Foils, Supreme Infrastructure India, Borana Weaves, Accretion Pha.35
• June 11: Toyam Sports, Neopolitan Pizza And Foods, Nms Resources Global, Lords Chemicals, Libas Consumer Products.35
• June 13: Rose Merc.35
• June 14: K&R Rail Engineering.35 While the direct impact of these specific earnings on the Nifty is limited, the broader corporate earnings season has generally indicated underlying corporate strength 12, which can contribute to general market confidence.

Table 2: Indian Economic Calendar (June 9-15, 2025)

IV. Nifty Technical Outlook & Key Levels for the Week

Technical analysis provides critical insights into market structure, momentum, and potential price movements.

A. Nifty 50 Performance Analysis

The Nifty 50 closed at 25,003.05 on June 6, 2025, marking a decisive breach above the psychological 25,000 level.1 The index has demonstrated strong upward momentum, rebounding impressively from recent lows at 24,500 and recording three consecutive positive sessions.1 Concurrently, the India VIX, a key measure of market volatility and perceived fear, experienced a significant decline last week, closing at ₹14.63 on June 6, down from ₹17.16 on June 3.37 The Nifty's ability to sustain itself above 25,000, coupled with the substantial decrease in India VIX, indicates a strong bullish sentiment and reduced market anxiety. This technical breakout suggests that the path of least resistance for the index is currently upwards, signaling increased confidence among market participants and potentially lower hedging costs for options traders.

B. Support and Resistance Levels

Identifying key support and resistance levels is fundamental for anticipating price action and managing risk.

Near-term support levels for the Nifty are identified at 24,857 and 24,767 1, with a broader support zone established between 24,700 and 24,200.33 The 25,000 mark, having been decisively breached, is now expected to transition into a crucial psychological and technical support level.

Immediate resistance levels are observed at 25,149 and 25,239 1, and within the broader zone of 25,000 to 25,500.33 A sustained move above Friday's high and the 25,100-25,150 zone could pave the way for further upside towards 25,600 and potentially 26,000.32 These identified support and resistance levels are critical for short-term trading strategies. The conversion of 25,000 from a resistance to a support level, if sustained, reinforces the bullish bias. A clear breakthrough above the 25,100-25,150 zone would confirm the next leg of the rally, while a failure to hold 25,000 would necessitate a re-evaluation of the bullish stance. These levels provide actionable entry, exit, and risk management parameters for market participants.

Table 3: Nifty 50 Key Support & Resistance Levels

C. Options Chain Analysis (June 13, 2025 Expiry)

Options chain data provides valuable insights into market expectations regarding future price movements and levels of support and resistance.

For the upcoming June 13, 2025 expiry, the highest Call Writing is observed at the 25,000 strike price, with an Open Interest (OI) of 81.2 Lakh.33 This indicates that option sellers anticipate strong resistance at or around this level. However, given that the Nifty has decisively closed above 25,000, these call writers may find themselves under pressure, potentially leading to a short-covering rally if the index maintains its gains.

Conversely, the highest Put Writing is concentrated at the 24,700 strike price, with an Open Interest of 66.7 Lakh.33 This suggests robust support at this level, as put writers expect the market to remain above it. The Nifty 26 June 2025 25000 Call Option (CE) also shows a significant Open Interest of 4,144,775 38, while the Nifty 12 JUN 2025 CE 23900 has an OI of 21,525.39 The options chain data reinforces the significance of the 25,000 level. The dynamic where high call writing at 25,000 is now challenged by the Nifty closing above it suggests that these call writers might be forced to cover their positions, which could further fuel an upward movement. The strong put writing at 24,700 confirms it as a solid base, indicating confidence in the market holding above this level. This interplay is crucial for options traders to understand potential price movements and identify strategic entry and exit points.

V. Nifty Market Prediction & Strategy for the Week Ahead

A. Synthesis of Global & Domestic Factors

The Nifty's trajectory for the upcoming week is poised at the intersection of powerful domestic catalysts and a generally supportive, albeit complex, global environment. The Reserve Bank of India's aggressive rate cut and Cash Reserve Ratio reduction have injected substantial liquidity into the banking system, significantly lowering borrowing costs and stimulating credit demand. This proactive monetary policy, coupled with robust buying activity from Domestic Institutional Investors (DIIs), creates a strong domestic foundation for the market. The anticipated revival of the southwest monsoon further strengthens this domestic narrative, promising support for the agricultural sector and rural consumption.

Globally, the tentative easing of US-China trade tensions, marked by resumed talks and reciprocal tariff reductions, contributes to a more risk-on sentiment. The European Central Bank's recent rate cut also adds to global liquidity, potentially directing capital towards emerging markets. These global tailwinds provide a favorable backdrop for the Nifty.

However, certain headwinds warrant careful monitoring. Persistent Foreign Institutional Investor (FII) selling, potentially influenced by global factors such as the strength of the US dollar or profit-booking, could cap the Nifty's upside. The upcoming US inflation data on June 11 is a critical event; any re-acceleration in US prices could delay Federal Reserve rate cuts, leading to higher US Treasury yields and a stronger dollar, which might trigger global risk aversion. Furthermore, China's recent manufacturing slowdown, particularly in its private sector, signals underlying weaknesses in global demand. Rising crude oil prices also pose a potential inflationary risk for India, given its status as a net importer.

Despite these potential external challenges, the Indian market's resilience appears increasingly driven by domestic liquidity and proactive policy action. The RBI's clear signal for growth support is a game-changer for sentiment, potentially attracting further domestic investment and insulating the market to some extent from global headwinds. The domestic drivers appear robust enough to absorb moderate external shocks.

B. Nifty Outlook and Recommendations

The Nifty 50 index is positioned for continued positive momentum in the coming week. The decisive close above the 25,000 mark, reinforced by declining volatility (India VIX), suggests that this level has transitioned into a strong support. The immediate target for the Nifty is the resistance zone between 25,149 and 25,239, with a sustained breakthrough potentially paving the way for a rally towards 25,600 and 26,000.

For traders and investors utilizing Option Matrix India, the following recommendations are pertinent:

• Maintain a Bullish Bias with Caution: The overall market structure supports long positions, particularly in rate-sensitive sectors such as financials, auto, and real estate, which are direct beneficiaries of the RBI's policy actions. However, the ongoing FII selling and global data releases necessitate a cautious approach.
• Monitor Key Data Releases: The US CPI data on June 11 and India's CPI data on June 12 are critical events. These releases can introduce significant volatility. Traders should be prepared to adjust positions based on the outcomes, as unexpected inflation figures could alter central bank expectations and global capital flows.
• Utilize Technical Levels for Risk Management: For long positions, the 25,000 level should be considered a crucial psychological and technical support. A break below this level, particularly if sustained, would warrant a re-evaluation of the bullish stance. Support levels at 24,857 and 24,767 are key near-term downside markers.
• Leverage Options for Defined Risk: Given the potential for short-term volatility around data releases, options strategies that define maximum risk, such as bull call spreads or covered calls (for existing equity holdings), may be considered. For those anticipating a sustained upward move, buying at-the-money or slightly out-of-the-money call options with expiry beyond the immediate week could offer participation in the rally.
• Focus on Domestic Growth Stories: Companies with strong domestic demand exposure, particularly those benefiting from increased consumption and credit growth, are likely to outperform. The anticipated monsoon revival also provides a positive outlook for rural-focused sectors.
• Watch Crude Oil and Global Trade Developments: While trade tensions have eased, the underlying issues persist. Any renewed escalation or a sharp surge in crude oil prices could act as headwinds for the Indian market.

In conclusion, the Nifty stands at a pivotal point, buoyed by strong domestic policy support and a generally favorable global backdrop. While external factors introduce an element of uncertainty, the market's resilience and the robust domestic institutional participation suggest a positive outlook for the upcoming week, with opportunities for well-informed and strategically positioned market participants.