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Informist, Thursday, Jun. 4, 2026

 

By Gopika Balasubramanium

 

MUMBAI – Immense uncertainty over the duration of the war in West Asia, which started on Feb. 28 and has entered its fourth month, will keep the Indian equity market range-bound in June, analysts are convinced. Market participants will track comments of the Reserve Bank of India on inflation, growth, and future policy actions the outcome of its Monetary Policy Committee's meeting Friday. Analysts struck a cautious tone on these key factors.

 

The median of estimates from 16 brokerages polled by Informist suggests the Nifty 50 is likely to find support at 22950 points, suggesting a fall of up to 2% in June. 

 

On Thursday, the index ended at 23416.55 points, up 10.95 points, or 0.1%. The current Nifty 50 level is closer to the median of estimates for resistance level at 23750 points, suggesting the index could rise by just 1.4%. The range of resistance level from technical analysts, with 24500 points being the highest, suggests the index could rise up to 5%. On the other hand, the lowest support level of 22400 points among the estimates indicates index could fall by as much as 4.3%.

 

The benchmark equity index had fallen 12% in March since the war began at the end of February, but saw some recovery in April. In May, the index fell 2%.

 

There are also concerns about how efficiently companies can contain the higher energy and raw material costs in order to report earnings growth. The sharp depreciation in the rupee is yet another major blow for the market, giving foreign investors one more reason to sell Indian equities.

 

Market participants prefer to be stock-specific in the near term, with a focus on companies with the visibility of expansion in margins and resilience to ongoing rise in commodity prices. They forecast the movement in the benchmark index to be in a range of about 1000 points without any sharp upside in June. Daily volatility in the market is expected to persist, analysts said.

 

Analysts expect companies from the automotive, manufacturing, power, distribution and transmission, and pharmaceutical sectors to be resilient to the current risks playing out. "From an index perspective, it is expected to be range-bound in June, with some bouts of volatility, and there should be stock-specific movement depending upon macroeconomic factors supporting it," Narendra Solanki, head of research at Anand Rathi Shares and Stock Brokers said. A lot would depend on the outcome of the RBI meeting and what the RBI has to say on growth and inflation, he added.

 

If at all a peace deal is signed between the US and Iran in June, a relief rally is likely to be seen, but it will be short lived, according to analysts. The sustenance of those gains and further upside in the headline indices would primarily depend on how fast the disruption in supply chains and freight movement in the Strait of Hormuz normalises in the event of a peace deal, they said. 

 

At the very outset, analysts expect the market to take cues from the outcome of the RBI's Monetary Policy Committee's meeting, due Friday. The consensus is that the apex bank will refrain from hiking the repo rate and hold it at 5.25% this week, but experts did not rule out the possibility of a rate hike later this year. The committee had left the repo rate unchanged in February and April after lowering it by 125 basis points in 2025, the largest cumulative easing in a calendar year since 2019. The repo rate was last raised in February 2023.

 

The repo rate hike cycle will start this year for sure, said Harini Dedhia, fund manager at Tamohara Investment Managers. "Typically, we follow the lead of global banks and we don't really start the cycle ourselves. So unless I'm seeing one (a rate hike by another central bank) before Friday... I don't expect to see it this time around. But, it should definitely happen this year, following whenever Fed (the US Federal Reserve) decides to bite the bullet." 

 

"RBI will likely be hawkish this time, and revisions to GDP estimates will likely be in due course of time, they will not immediately acknowledge there are risks to growth in this muted scenario," Ankit Dharamshi, associate director and equity fund manager at RNM Capital Trust, said. In April, the central bank had said the economy would grow by 6.9% in FY27.

 

More importantly, the latest weather forecast of the monsoon being weaker than normal this year has also triggered concerns about agricultural output, food inflation, and rural consumption. If the rural demand is hit substantially, it will hit the sales of consumer-facing companies, especially belonging to automobile and fast-moving consumer goods, analysts said.

 

Some market participants believe that the negative impact arising from the West Asia war has been factored in by the market; others expect the market to correct more. The market is acting as if there is no West Asia war, and that means "we can expect more time(-wise) correction," a senior equity fund manager with a leading fund house said. The continuous inflow of capital from domestic investors has prevented the market from falling, even after the war began, analysts said. As long as these inflows continue, the market is unlikely to fall sharply, they said.

 

However, what is worrisome for market sentiment is the fact that the stoppage ratio of systematic investment plan crossed 100% in April, according to the latest data from the Association of Mutual Funds in India. AMFI attributed the higher discontinuation numbers partly to temporary stoppages amid market volatility. The possibility of retail investors rethinking their equity investments cannot be ruled out. However, whether a trend will arise from it should be watched out for, fund managers said. The returns from the Indian equity market has been painfully low in the last two years, they said.

 

VALUATIONS, FII 

Market participants are divided in their views about the valuations of large-cap companies, with some calling it reasonable due to the recent correction, and others still calling it expensive due to risks to earnings growth in the coming quarters from rising input costs. On the other hand, analysts point to the current Nifty 50 one-year forward price-to-earnings ratio of 18.5 times being slightly below the five-year long-term average.

 

Valuations of companies are a lesser concern now...more focus is on when the uncertainty over the situation in West Asia will normalise, said Dharamshi. Currently, valuations are reasonable, as foreign investors sold the premium in India to buy in South Korea, Taiwan, and Japan markets, which were at a discount. "Once things start to normalise, people will come back to domestic (India) market, as other emerging markets would be at premium," he added. 

 

"At present, India is out of favour for FIIs (foreign institutional investors) due to the headwinds which India faces and the impressive earnings growth in other markets like South Korea, Taiwan, US, and Japan," said V.K. Vijayakumar, chief investment strategist at Geojit Investments. 

 

EARNINGS

Crude staying at levels near $100 a barrel on an average for a prolonged period is seen hitting the earnings growth of Indian companies. Analysts concur that the market is pricing in a 7?rnings growth for Nifty 50 companies in FY27. In the March quarter, the combined net profit growth of Nifty 50 companies, excluding one-time items, was 5.3% on year. 

 

"If the conflict doesn't end within one or two months, there would be significant downgrades to earnings outlook," Chokkalingam S., head of research at Equinomics, said. Failure of monsoon may not significantly impact corporate earnings as long as the rainfall deficit is around 10% from normal, he said. "If the deficit is much beyond 10%, say more than 15% to 20%...agri (agricultural) inputs and demand would be impacted adversely," the research head said.

 

The near-term earnings—of June and September quarters--may see some moderation, primarily due to the lagged impact of elevated crude oil prices on margins and inflation, Pankaj Pandey, head of research at ICICI Securities, said. "However, on a full-year basis, the impact appears manageable," he said. The brokerage's forward estimates for earnings per share in FY27 and FY28 indicate only a 1.4% downward adjustment. This suggests that crude-related pressures are likely transient rather than structural, he added.

 

In the June quarter, commodity-heavy sectors such as automobile and capital goods are expected to underperform on earnings, whereas commodity producers, particularly those of metals, are likely to outperform amid favourable pricing trends, ICICI Securities said in a report. It is likely to be neutral for index heavyweights such as banking, insurance, and financial services companies, considering steady credit growth alongside stable margins. The broking firm is also neutral on information technology companies for whom benefits from currency depreciation will be offset by muted global demand.  End

 

Following are the support and resistance levels for the Nifty 50 index for June from 16 brokerages:

 

BROKERAGE	Support 1	Support 2	Resistance 1	Resistance 2
Religare Broking	22400	--	24500	--
Angel One	22700	23150	24000	23600
ICICI Securities	22700	--	23800	--
LKP Securities	22700	--	24000	--
SAMCO Securities	22800	--	24300	--
Globe Capital Market	23000	22400	24100	24500
IDBI Capital Markets & Securities	23000	--	24200	--
Chola Securities	23000	22800	24000	24600
Ashika Group	23000	--	23500	24000
Teji Mandi Investment Technologies	23000	--	24500	--
Mirrae Asset Sharekhan	23100	22200	24100	24600
Motilal Oswal Financial Services	23100	--	24100	--
StoxBox	23100	22800	23700	23800
Ventura Securities	23106	22940	23493	23705
Nirmal Bang Institutional Equities	23200	--	24400	--
Anand Rathi Shares and Stock Brokers	23300	23100	23800	24100
Median	22950		23750

 

 

US$1 = INR 95.78

 

With inputs from Team Informist

 

Edited by Deepshikha Bhardwaj

 

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