Markets to open flat as focus shifts to RBI rate cut meet

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Gift Nifty at 24,855 signals another flat opening as the market is in a consolidation phase. Analysts expect the market to remain volatile as foreign portfolio investors remaine cautious about the Indian market. With the results season almost coming to an end, the focus now shifts to the upcoming RBI monetary policy.

Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd, said: The Indian market is expected to continue its consolidation amid weak global cues, although the downside may be limited due to strong domestic macros and a potential boost from an anticipated RBI rate cut. 

“The Reserve Bank of India (RBI) may go in for a “jumbo rate cut” of 50 basis points on Friday to reinvigorate the credit cycle and counterbalance uncertainties,” said an SBI research report. RBI’s rate-setting panel, the Monetary Policy Committee (MPC), will start deliberations on the next bi-monthly monetary policy on June 4 and announce the decision on June 6.

Meanwhile, Japanese investment bank and brokerage Nomura in its India Equity Strategy report said that it is bullish on the Nifty in FY26, notwithstanding the global macro headwinds. “Against the current macro backdrop, we assess the fair value range for the Nifty at 18-24x one-year forward earnings, which implies an upside/downside of 24 per cent/12 per cent from current levels. Assuming benign risk premium and low yields, we raise the target valuation multiple to 21x (from 19.5x previously). Based on 21x P/E on FY27F earnings, we arrive at our March 2026 Nifty target of 26,140 (vs 24,970 previously), suggesting potential upside of 6 per cent from current levels.” 

However, BofA Securities says it is “cautious on markets near term as valuations seem full & markets are ignoring risks of likely slowing global growth” despite the brokerage seeing structural drivers “likely to position India for sustained strong economic and corporate earnings growth.” 

According to its recent report, India ranks as the second country globally, after the US, to deliver the best market returns over the past three decades (7 per cent CAGR in USD terms), “with growth driving a large share of its stock returns rather than valuation expansion.”

Most Asian stocks are up in early deal on Tuesday.

Published on June 3, 2025