The Indian stock market closed with a decline last week. Analysts have pointed out many reasons due to which Sensex and Nifty may remain under pressure when trading starts on Monday. On Friday, Sensex fell 117 points to close at 74,243, while Nifty 50 fell by 50 points and closed at 23,367. The biggest falling stocks in Sensex included Trent, TCS, Tata Steel, NTPC, HCL Tech, Bharti Airtel, Kotak Mahindra Bank and Reliance Industries, which saw a decline of 1-2 per cent. Let us also tell you about those 5 factors which can decide the movement of the stock market next week…
1) Weak global signal
A huge fall was seen in Wall Street on Friday. The tech-heavy Nasdaq fell more than 4 percent, its biggest one-day decline since April 2025. This happened because the better-than-expected US jobs report increased concerns that the Federal Reserve could keep interest rates high for a long time. The Nasdaq Composite fell 4.2 percent, led by a more than 6 percent decline in Nvidia and a nearly 8 percent decline in Broadcom. Broadcom’s weaker-than-expected guidance added to concerns that AI-based demand may not grow as fast as the market had expected. The Dow Jones fell 1.4 percent, while the S&P 500 lost nearly 3 percent.
2) Effect of RBI policy
Reserve Bank of India (RBI) Governor Sanjay Malhotra announced on Friday that the Monetary Policy Committee (MPC) of the central bank has unanimously decided to maintain the policy repo rate at 5.25 percent. He assessed the impact of rising energy prices and supply disruptions due to the ongoing conflict in West Asia. RBI also increased the investment limit for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) in equity instruments.
According to Siddharth Khemka, Research Head, Wealth Management, Motilal Oswal Financial Services, the Indian equity market is likely to remain in a range next week amid a mixed impact of domestic and global factors. Khemka said that the Central Bank increased the inflation estimate for FY27 to 5.1 percent and reduced the GDP growth estimate for FY27 to 6.6 percent, which increased concerns about energy prices, geopolitical tensions in West Asia and weather-related uncertainties.
3) FII selling continues
According to Pavitro Mukherjee, Deputy Vice President of Research at Bajaj Broking, in the first week of June, foreign institutional investors (FIIs) remained net sellers in the Indian market and sold shares worth Rs 31,120 crore. At the same time, domestic institutional investors (DIIs) continued to provide support as net buyers. He said that amid continuous geopolitical tension, investor sentiment remained weak, due to which crude oil prices remained high. Market participation remained cautious due to global uncertainty and macro-economic challenges. Going forward, institutional flows are likely to remain very sensitive to developments in US-Iran relations and fluctuations in oil prices.
4) Iran-US tension
The US military said that on Saturday the US military attacked Iran’s coastal radar sites after intercepting a drone sent by Iran towards the Strait of Hormuz. Reuters quoted a US official as saying that the military believed four Iranian drones were targeting regional maritime traffic. US Central Command said on X that it then attacked Iran’s surveillance sites in Goruk and Qeshm Islands, located near the Strait of Hormuz. Meanwhile, Iran’s Revolutionary Guard Corps said it targeted US bases in Kuwait and Bahrain in response to the attacks and attacked four tankers trying to cross the strait without permission. These incidents have again raised concerns about rising tensions in the oil-rich Middle East.
5) Increase in bond yields
US Treasury yields increased due to concerns of rising inflation. The yield on the 2-year Treasury note, which is most sensitive to expectations about the Federal Reserve’s policy, hit a 15-month high. Generally, higher interest rates make bonds more attractive than equities, which puts pressure on stock market sentiment.
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