RBI Policy Decision, US-Iran Developments To Guide Markets Next Week, Investors Also Watching Crude Oil & FII Flows

Mumbai: Indian equity markets closed sharply lower on Friday after heavy selling in the final hour of trading erased earlier gains and pushed benchmark indices deep into the red.

The BSE Sensex plunged 1,092 points, or 1.44 per cent, to close at 74,775.74, while the NSE Nifty fell 359 points, or 1.50 per cent, to settle at 23,547.75.

During the day, the Nifty slipped to an intraday low of 23,485 as selling pressure intensified towards market close.

Profit Booking Hits Sentiment

For most of the trading session, markets moved within a narrow range as investors remained cautious amid uncertainty surrounding developments in the United States and Iran.

However, profit booking accelerated during the last hour of trade, triggering a broad-based decline across sectors and dragging benchmark indices lower.

Market participants preferred to reduce exposure ahead of several important domestic and global events scheduled for the coming week.

RBI Policy Meeting in Focus

One of the biggest triggers for investors will be the upcoming Reserve Bank of India (RBI) Monetary Policy Committee (MPC) meeting scheduled between June 3 and June 5.

The six-member panel, led by RBI Governor Sanjay Malhotra, will review interest rates, inflation trends, liquidity conditions and the country's economic growth outlook.

Investors will closely watch the policy announcement for signals on borrowing costs and future monetary policy direction.

US-Iran Situation Remains a Key Global Trigger

Global geopolitical developments are also expected to influence market sentiment.

Reports from Iranian state media suggested that a proposed understanding between the United States and Iran could involve the release of $12 billion in frozen Iranian assets. However, similar reports were earlier dismissed by the White House.

Any progress or setback in negotiations could impact global risk sentiment and commodity prices.

Crude Oil Prices Under Watch

Crude oil prices, an important factor for the Indian economy, fell sharply on Friday.

Oil futures declined more than 2 percent, touching their lowest level in six weeks amid hopes of a ceasefire involving the US, Israel and Iran.

Lower oil prices generally benefit India by reducing import costs and easing inflationary pressures.

Foreign Investor Activity Also Important

Apart from policy decisions and geopolitical developments, investors will closely monitor foreign institutional investor (FII) flows.

Market experts believe that RBI policy guidance, global developments and movement in crude oil prices will play a crucial role in determining the direction of Indian equities in the week ahead.