Nifty Index Indicates Lackluster Opening Ahead of RBI Policy Amid Ongoing Middle East Tensions

Market Sentiment Remains Cautious Ahead of RBI Policy Meeting

The Indian equity market is likely to open on a subdued note on Thursday, with the GIFT Nifty indicating a largely flat start. Investors are balancing the easing of oil prices against weak global cues, amidst persistent geopolitical tensions and the upcoming Reserve Bank of India's monetary policy meeting.

The GIFT Nifty was trading at 23,327 in early trade, down 5 points or 0.02 percent, signaling a muted opening for domestic equities. This comes after the Sensex fell 304 points and the Nifty declined 78 points on Wednesday due to rising crude oil prices and uncertainty over a potential U.S.-Iran peace deal.

Global markets offered little comfort, with Asian equities trading lower on Thursday. The MSCI's broad Asia-Pacific index outside Japan fell 0.8 percent, Japan's Nikkei declined 1.3 percent, and South Korean shares dropped around 2 percent after reopening following a holiday. S&P 500 futures were also down about 0.4 percent in early trade.

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The U.S. markets ended sharply lower overnight due to renewed fighting between the United States and Iran, triggering concerns about inflation and global growth. The Dow Jones Industrial Average fell 621 points, or 1.21 percent, while the S&P 500 and Nasdaq declined 0.74 percent and 0.89 percent, respectively. Investors booked profits after a strong rally, while rising energy prices added to worries that inflation could remain elevated.

Crude oil prices eased modestly in Asian trade after Israel and Lebanon renewed a ceasefire agreement, raising hopes for broader diplomatic progress in the region. Brent crude slipped 0.7 percent to around $97 per barrel, and WTI crude fell to about $95.4 per barrel. However, prices remain elevated after gaining roughly 2 percent on Wednesday amid fresh hostilities involving Iran and U.S. forces near the Strait of Hormuz.

Apart from geopolitical developments, investors will closely watch the RBI's monetary policy outcome, which is due on Friday, and commentary on inflation, growth, liquidity, the impact of elevated crude prices, and global uncertainty.

Foreign institutional investors remained sellers on June 3, offloading equities worth Rs 5,616 crore, while domestic institutional investors purchased shares worth Rs 5,740 crore, largely offsetting the foreign outflows.

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Markets are likely to remain cautious as investors navigate a combination of geopolitical risks, elevated crude prices, sustained FII selling, and uncertainty around global trade developments. The RBI's policy guidance could emerge as a key catalyst for domestic markets.

On the technical front, the Nifty faces immediate resistance in the 23,500-23,550 zone, while the 23,250-23,150 region remains a crucial support area. For Bank Nifty, resistance is seen around 54,400, with immediate support near 53,600.