Markets to open on a flat note amid caution ahead of RBI policy announcement

Domestic markets are expected to open on a flat note on Thursday amid a cautious mood among traders and investors. Analysts expect the consolidation phase to continue as all eyes are now on tomorrow’s RBI policy outcome. The markets expect the central bank to announce a 25 bps rate cut.

Meanwhile, the HSBC India services purchasing managers’ index (PMI), compiled by S&P Global, stood at 58.8 in May, marginally up from 58.7 in April. “The index has been above the neutral 50 mark, which separates contraction from expansion, for 46 months straight,” said a note from AUM Capital.

In another positive outlook, Moody’s has predicted that the Indian banking sector will broadly preserve asset quality, despite trade tensions posing risks for the global economy. It anticipates the non-performing loan (NPL) ratio will stay at the 2–3 per cent level over the next 12 months.

Gift Nifty is ruling at 24,740 in early deals on Thursday, against the Nifty futures close of 24,729 on the NSE on Wednesday, indicating a flattish opening. However, equities across the Asia-Pacific region are up marginally, even as Japan’s market is down slightly. 

F&O trading still presents a cautious outlook for Indian stocks.

Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities, said options data continues to signal caution. “Significant call writing has been observed at near-the-money strikes, while put writers are shifting lower, implying reduced confidence on the bullish side,” he added. Put-Call Ratio (PCR) saw a slight uptick from 0.49 to 0.67, suggesting some reduction in bearish pressure, though sentiment remains skewed to the downside, he further said.

Meanwhile, India VIX eased further ahead of Friday’s monetary policy outcome, slipping 4.89 per cent to 15.74, marking a nearly 10 per cent drop over two sessions. “This decline in volatility points to reduced market anxiety, possibly an early sign of optimism creeping in,” Dhameja said.

According to analysts, the focus should remain on a stock-specific trading approach

Published on June 5, 2025