Indian equity markets experienced a volatile and negative week ending June 5, with the Sensex and Nifty closing down by 0.83% and 0.96% respectively, primarily due to profit-taking after the Reserve Bank of India's policy announcement on Friday. The RBI maintained the repo rate at 5.25% but revised its FY27 real GDP growth forecast downwards to 6.6% and projected inflation to peak at 5.9% in the third quarter, causing concern among investors, although the central bank also introduced capital support measures for foreign investors and state-run firms. Sectorally, metal, telecom, and IT stocks underperformed, while hospitals, realty, and PSU banks showed resilience, and the rupee appreciated against the dollar following the RBI's announcements, despite significant foreign institutional investor outflows on Friday and ongoing geopolitical tensions in the Middle East influencing crude oil prices.

Indian equity markets experienced a volatile and negative week ending June 5, with the Sensex and Nifty closing down by 0.83% and 0.96% respectively, primarily due to profit-taking after the Reserve Bank of India's policy announcement on Friday. The RBI maintained the repo rate at 5.25% but revised its FY27 real GDP growth forecast downwards to 6.6% and projected inflation to peak at 5.9% in the third quarter, causing concern among investors, although the central bank also introduced capital support measures for foreign investors and state-run firms. Sectorally, metal, telecom, and IT stocks underperformed, while hospitals, realty, and PSU banks showed resilience, and the rupee appreciated against the dollar following the RBI's announcements, despite significant foreign institutional investor outflows on Friday and ongoing geopolitical tensions in the Middle East influencing crude oil prices.

Indian equity markets experienced a volatile and negative week ending June 5, with the Sensex and Nifty closing down by 0.83% and 0.96% respectively, primarily due to profit-taking after the Reserve Bank of India's policy announcement on Friday. The RBI maintained the repo rate at 5.25% but revised its FY27 real GDP growth forecast downwards to 6.6% and projected inflation to peak at 5.9% in the third quarter, causing concern among investors, although the central bank also introduced capital support measures for foreign investors and state-run firms. Sectorally, metal, telecom, and IT stocks underperformed, while hospitals, realty, and PSU banks showed resilience, and the rupee appreciated against the dollar following the RBI's announcements, despite significant foreign institutional investor outflows on Friday and ongoing geopolitical tensions in the Middle East influencing crude oil prices.

It was a volatile, ultimately downbeat week for Indian equity investors. Despite two green sessions, including a meaningful relief bounce on Monday, the benchmark indices ended the week in the red, with the Sensex losing 619.21 points (0.83 per cent) and the Nifty shedding 226.85 points (0.96 per cent) over the five trading sessions ending June 5.

Friday saw the Sensex close at 74,243.34, down 116.67 points, and the Nifty settle at 23,366.70, down 49.85 points, as profit-taking followed the Reserve Bank of India's policy announcement.

Metal, telecom, and IT were the week's biggest sectoral drags, while hospitals, realty, and PSU banks held up relatively well. 

That policy outcome was the week's centrepiece. The RBI's Monetary Policy Committee unanimously voted to hold the benchmark repo rate at 5.25 per cent, maintaining a "neutral" stance. 

The decision was in line with expectations, but the accompanying revisions were less welcome: the RBI trimmed its real GDP growth forecast for FY 2026–27 to 6.6 per cent, down from 6.9 per cent projected in April and well below the 7.7 per cent growth India clocked in FY 2025–26. It also forecast inflation at 5.1 per cent for the year, with prices expected to peak at 5.9 per cent in the third quarter before easing.

The RBI offset some of the anxiety with a package of capital-support measures: scrapping taxes on interest income and capital gains for eligible foreign investors in government securities from April 1, 2026, offering concessional forex swaps for state-run firms raising overseas debt, and subsidising hedging costs on FCNR(B) deposits until September 30, 2026. 

The rupee responded sharply, appreciating 56 paise to close at 95.18 against the dollar on Friday. 

But the situation is not that hunky dory. Foreign institutional investors offloaded equities worth ₹8,776.25 crore on Friday alone. 

The Israel–Lebanon ceasefire, seen as a potential opening for broader US–Iran de-escalation, showed signs of fraying as Hezbollah rejected its terms. Brent crude dipped marginally to $94.93 per barrel but held near multi-year highs. 

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