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RBI’s rate cut helps Dalal Street to end higher for the week
Jun-06-2025

Indian markets closed notably higher in the passing week with gains of around a percent mainly due to buying in the last trading session of the week after the RBI cut repo rate by a higher-than-expected 50 bps to 5.50% to prop up growth. Also, the RBI lower its inflation forecast at 3.70% for FY26, against 4% forecast made in April. It also cut CRR by 100 bps to 3% from 4%.

Some of the major developments during the week are:

India's GDP grows at 7.4% in Q4 FY25: The government in its latest data has showed that India’s real gross domestic product (GDP) growth for the January-March quarter (Q4) of financial year 2024-25 (FY25) stood at 7.4 per cent. The growth in Q4 FY25 was lower than the 8.4 per cent expansion in the year-ago quarter.

Gross GST collections grow 16.4% in May: The Gross GST collections has grown 16.4% in May to over Rs 2.01 trillion as compared to Rs 1.72 trillion in May 2024. It has remained above the Rs 2 trillion mark for the second month in a row. Meanwhile, April 2025 recorded the highest Gross GST collection of Rs 2.37 trillion.

India’s manufacturing activity slows down slightly in May: India’s manufacturing activity slowed down slightly in the month of May 2025 with HSBC India Manufacturing Purchasing Managers' Index (PMI) falling to three-month low of 57.6 from 58.2 in April 2025 amid softer growth of new orders and production. 

India’s services sector maintains gaining momentum in May: India’s services sector maintained gaining momentum in the month of May 2025, amid higher exports with the strongest improvements in international demand. The seasonally adjusted HSBC India Services PMI Business Activity Index grew to 58.8 in May from 58.7 in April. 

RBI cuts repo rate by 50 bps to 5.50%: In a surprise move, the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) voted to reduce the policy repo rate by 50 basis points (bps) to 5.50% with immediate effect, for the third time in a row. CPI inflation for the financial year 2025-26 is now projected at 3.7%.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 737.98 points or 0.91% to 82,188.99 during the week ended June 06, 2025. The BSE Midcap index gained 960.16 points or 2.13% to 46,096.51 and Smallcap index surged 1027.01 points or 1.96% to 53,440.26. On the sectoral front, S&P BSE Realty was up by 709.86 points or 9.65% to 8,069.29, S&P BSE Consumer Discretionary Goods & Services was up by 214.32 points or 2.30% to 9,529.41 and S&P BSE Finance was up by 228.81 points or 1.83% to 12,710.28 were the top gainers, while S&P BSE Capital Goods was down by 291.94 points or 0.41% to 70,797.70 and S&P BSE Information Technology was down by 56.97 points or 0.15% to 36,836.56 were the only losers on the BSE.

NSE movement for the week

The Nifty surged 252.35 points or 1.02% to 25,003.05. On the National Stock Exchange (NSE), Nifty Mid Cap 100 increased 1590.30 points or 2.77% to 59,010.30, Nifty Next 50 gained 1231.55 points or 1.84% to 67,992.85, and Bank Nifty was up by 828.70 points or 1.49% to 56,578.40, while Nifty IT was down by 26.90 points or 0.07% to 37,294.85. 

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in equity segment in the week, with gross purchases of Rs 119,772.97 crore and gross sales of Rs 128,522.41 crore, leading to a net outflow of Rs 8,749.44 crore. They also stood as net sellers in the debt segment with gross purchases of Rs 10,990.08 crore against gross sales of Rs 32,764.92 crore, resulting in a net outflow of Rs 21,774.84 crore. In hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 116.42 crore and gross sales of Rs 83.22 crore, leading to a net inflow of Rs 33.20 crore.

Industry and Economy

Moody's Investors Service and its local arm ICRA Ratings have said that Indian enterprises are well positioned to handle the impact of tariffs and geopolitical tensions. However, they said India Inc will be ‘measured’ in making investment decisions in the new fiscal because of the external headwinds. Moody's said ‘Indian non-financial companies are not directly affected by US import tariffs due to their focus on domestic consumption and low dependence on exports’. It further noted that government initiatives to boost private consumption, expand manufacturing capacity and increase infrastructure spending will help offset the weakening outlook for global demand. 

Outlook for the coming week

Indian markets snapped two-week losing streak and ended higher in the passing week after the Reserve Bank of India (RBI) announced a larger-than-expected rate cut and 100 basis points reduction in the Cash Reserve Ratio (CRR).

In the coming week, investors will be eyeing major macro-economic data starting with the Consumer Price Index (CPI) or retail inflation data for the month of May to be out on June 12. India's retail inflation, as measured by the CPI, eased to 3.16 per cent in the month of April 2025. It is the lowest year-on-year inflation after July 2019.

Also, traders will be eyeing Passenger Vehicles Sales data on June 12. Investors will be awaiting Foreign Exchange Reserves and Balance of trade (Exports & Imports) data on June 13. 

On the global front, investors would be eyeing few economic data from world’s largest economy, starting with Wholesale Inventories and Consumer Inflation Expectations on June 09, followed by NFIB Business Optimism Index and Redbook on June 10, API Crude Oil Stock, Core Inflation, EIA Crude Oil Stocks and Monthly Budget Statement on June 11, Initial Jobless Claims on June 12 and Michigan Consumer Sentiment and Baker Hughes Oil Rig Count on June 13.

Top Gainers 

Eternal up by 14.66% was the top gainer on Nifty for the week - Eternal traded higher as private brokerage firms remained bullish on the stock amid the company's improving execution in the domestic food delivery space. Besides, Eternal has launched an electric rental bike fleet in Delhi NCR on June 05, enabling delivery partners to rent these vehicles for food deliveries. 

Dr. Reddy's Lab up by 5.82% was another top gainer on Nifty for the week - Dr. Reddy's Laboratories and Alvotech have entered into a collaboration and license agreement to codevelop, manufacture and commercialize a biosimilar candidate to Keytruda (pembrolizumab) for global markets. Keytruda (pembrolizumab) is indicated for the treatment of numerous cancer types.  

Top Losers 

Tata Steel down by 3.45% was the top loser of the week on Nifty - Matel stocks traded lower after US President Donald Trump's announcement to double tariffs on imported steel and aluminium. US President Donald Trump told Pennsylvania steelworkers that he would double the tariff on steel imports to 50% to protect their industry, a dramatic hike that could further increase prices for a metal used to make housing, autos and other goods.

HDFC Life Insurance down by 3.30% was another top loser of the week on Nifty - HDFC Life Insurance witnessed some profit taking. Recently, HDFC Life achieved a claim settlement ratio of 99.68%, in Individual Death Claims, in FY’25. The company settled claims under 19,666 policies and paid a total amount of Rs 2060 crore as death claim benefits. These numbers achieved in FY’25 are a reflection of the Company’s commitment towards customer centricity.

Technical viewpoints

During the week, CNX Nifty touched the highest level of 25,029.50 on June 6 and lowest level of 24,502.15 on June 3. On the last trading day, the Nifty closed at 25,003.05 with weekly gain of 252.35 points or 1.02 percent. For the coming week, 24,660.30 followed by 24,317.55 are likely to be good support levels for the Nifty, while the index may face resistance at 25,187.65 and further at 25,372.25 levels.

US Market

The U.S. markets traded higher during the week as job openings in the U.S. unexpectedly increased in the month of April. Job openings climbed to 7.391 million in April from an upwardly revised 7.200 million in March. 

Some of the major developments during the week are:

U.S. jobless claims unexpectedly rise to nearly eight-month high: Initial jobless claims climbed to 247,000, an increase of 8,000 from the previous week's revised level of 239,000. Street had expected jobless claims to dip to 235,000.

Trade deficit in U.S. narrows substantially in April: The U.S. trade deficit narrowed to $61.6 billion in April from a revised $138.3 billion in March. Street had expected the trade deficit to shrink to $94.0 billion.

U.S. services index unexpectedly indicates slight contraction in May: The Institute for Supply Management (ISM) said its services PMI fell to 49.9 in May from 51.6 in April. Street had expected the index to inch up to 52.0.

Labor productivity in U.S. slumps 1.5% in Q1: Labor productivity slumped by 1.5 percent in first quarter compared to the previously reported 0.8 percent decline. Street had expected the decrease by labor productivity to be revised to 0.7 percent.

U.S. private sector employment rises much less than expected in May: ADP said private sector employment rose by 37,000 jobs in May after climbing by a downwardly revised 60,000 jobs in April.

European Market

European markets remained higher during the passing week, with investors digesting the European Central Bank's (ECB) interest rate decision, and a slew of regional economic data.

Some of the major developments during the week are:

ECB cuts interest rates by 25 bps: The Governing Council, led by ECB President Christine Lagarde, lowered the deposit facility rate by a quarter basis point to 2.0 percent. 

Eurozone private sector expands for fifth month: The final results of the purchasing managers' survey by S&P Global showed that the final HCOB composite output index fell to 50.2 in May from 50.4 in April. 

Eurozone Inflation falls: The figures from Eurostat revealed that inflation softened more-than-expected to 1.9 percent in May from 2.2 percent in April. The rate was expected to slow to 2.0 percent.

Euro area jobless rate eases to 6.2% as expected: Eurozone unemployment rate fell for the first time in four months in April. The seasonally adjusted jobless rate dropped to 6.2 percent from 6.3 percent in March.

German manufacturing orders rise unexpectedly: Factory orders rose 0.6 percent month-on-month in April, following a revised 3.4 percent rise in March. This was the second consecutive month of growth. 

Asian Market

Asian markets, barring Nikkei composite index, traded higher during passing week, as the leaders of the U.S. and China agreeing to further talks aimed at reaching a deal. Traders also reacted to a hawkish European Central Bank (ECB) rate cut.

Some of the major developments during the week are:

Japan's exports fall in first 20 days of May: Japan’s exports fell in the first 20 days of May as Donald Trump's administration sweeping tariffs continued to disrupt trade. Exports measured by value dropped 3% from the same period a year earlier.

Japan monetary base sinks 3.4% in May: The monetary base in Japan was down 3.4% on year in May- coming in at 656.0.12 trillion yen. That beat forecasts for a decline of 4.2% following the upwardly revised 4.8% contraction in April.

China’s factory activity shrinks in May: China’s manufacturing activity in May shrank at its fastest pace since September 2022. The Caixin/S&P Global manufacturing purchasing managers’ index came in at 48.3, dropping sharply from 50.4 in April.

China’s services sector grows more than expected in May: China’s services sector grew more than expected in May. The Caixin China services PMI rose to 51.1 in May, improving from the 50.7 seen in the prior month.

South Korea’s new president vows to pursue talks with North Korea: South Korea’s new President Lee Jae-Myung vowed to restart dormant talks with North Korea and bolster a trilateral partnership with the U.S. and Japan.
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