Indian equity markets are likely to open on a cautious note on Monday amid a slew of negative news, such as the India Meteorological Department’s forecast of monsoon rainfall at around 90% of the long-term average, the prolonged US-Iran conflict, FPIs’ heavy selling, and the MSCI Rejig that lowered India’s weightage. The focus will be on the upcoming RBI meet, which will be released on Friday. Besides, the US Bureau of Economic Analysis has revised first-quarter US GDP growth downward to 1.6% annualised from the earlier estimate of 2.0%, highlighting moderation in economic momentum.
Markets remained and will remain volatile amid continued uncertainty around the timing of a potential US-Iran deal and the reopening of the Strait of Hormuz (SoH). “The focus is now shifting to the RBI MPC decision slated for 5-Jun. The significant improvement in India’s outlook for the external account over the past two weeks, driven by 22% correction in Brent crude prices on hopes of a US-Iran deal, obviates the need for a rate hike. We expect the RBI to remain on hold next week, which is positive for the consumption recovery story and the earnings cycle,” said Emkay Global Research.
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Meanwhile, Gift Nifty at 23,725 signals a flattish opening. Global stocks in the Asia-Pacific region are up in early trading on Monday. Korea’s Kospi surged nearly 4 per cent while Taiwan’s gained 2 per cent.
Key economic data and RBI policy in focus
Factors to watch
The upcoming week is expected to remain highly sensitive to macroeconomic developments, geopolitical news flow, and central-bank commentary, said Ajit Mishra, SVP, Research, Religare Broking Ltd.
Participants will closely monitor global developments surrounding the US–Iran situation and movements in crude oil prices, which continue to remain critical for inflation expectations, currency stability, and foreign flows. On the domestic front, Industrial Production (IIP) data for April 2026, scheduled for release on 1 June, will be closely tracked for signs of manufacturing and economic momentum after recent moderation.
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The final HSBC Manufacturing PMI reading for May will also be announced on Monday, followed by the Services PMI and Composite PMI data on Wednesday. These indicators will provide important insights into demand trends, business activity, and growth resilience across sectors, Mishra explained at key events.
The central bank is expected to maintain a cautious stance amid rupee weakness, elevated bond yields, and inflationary risks. Additionally, investors will monitor India’s Q1 GDP growth data and foreign exchange reserves figures for further clarity on economic momentum and external sector stability.
Geopolitical developments to drive investor sentiment
Ponmudi R, CEO of Enrich Money, said markets are expected to remain highly sensitive to geopolitical and macroeconomic developments in the coming week, with investor attention firmly focused on the evolving U.S.–Iran negotiations, broader diplomatic developments in the Middle East, and the trajectory of crude oil prices. While expectations of a potential agreement have helped improve risk sentiment and drive a sharp correction in energy prices, investors remain cautious as a definitive breakthrough has yet to materialise.
In the current environment, investor positioning is likely to remain selective and cautious, with confidence contingent on tangible progress on the diplomatic front and continued stability across energy and currency markets, he added.