Week Ending June 20th 2025

Dear patrons, the Indian markets have been quite volatile over the last few days. Geopolitical tension has played a key role in this volatility. Situation across the middle East remains extremely capricious casting a shadow of war over the entire globe.

Indian markets have a lot to cheer as well as worry about. In an unprecedented move the Reserve Bank of India cut interest rates by 50 bps along with a staggered CRR (Cash Reserve Ratio) cut of 100 bps. The RBI has been very aggressive since the new Governor took over. It has pushed huge liquidity in the system through the use of OMOs (Open Market Operations, a whopping 3,00,000 crores), Interest Rate cut and CRR cut. RBI is eyeing impetus to GDP growth. Inflation has played a key role in RBI's bold decision, by touching a multi-year low. Worry for the markets is the ongoing tension in the middle East. Things might spiral into a full-blown war any time. A full-scale war is not good for the World as it may put pressure on Crude, which has already moved towards $80/barrel. Rising crude oil is extremely worrisome for a developing economy like India.

The US markets over the last week remained a mixed bag. The Federal Reserve held status quo in interest rates and there is possibility of two rate cuts during the year. These rate cuts however depend on inflation, which is not showing any signs of abetment. 

Coming back to Indian markets, we saw some sharp up move on Friday. Benchmark Nifty closed well above its psychological resistance of 25000.Domestic institutions have been buying Indian stocks consistently for last three weeks. Foreign investors are slowly but surely turning buyers in the Indian markets. Let's take a look at the charts and try to figure out what lies ahead for the markets in the coming week.

As we can see, Nifty surged past the all-important level of 25000 on Friday. This up move has come after a period of range bound activity over last couple of weeks. In all probability Nifty has broken out of its range and is headed towards 25500. As long as Nifty remains above 24800 it is a "Buy-On-Dips" market. A close below 24800 should open doors for further fall towards 24000. Coming week being expiry week for May derivatives contracts, may see a lot of volatility and a bout of short covering may propel Nifty towards its target in a jiffy.

BankNifty led the rally in the markets. However, it looks a bit fatigued right now. A move above 57000 is needed for BankNifty to scale further high levels. Immediate resistance for BankNifty is placed in 56300-56600 range. Move beyond 56600 should open the doors for 57800-58000 on BankNifty.

A word of caution for traders though. Traders MUST adhere to strict stoop losses. The moves can be sharp and wild given the expiry week as well as news flow from Isreal-Iran skirmish. Markets will provide ample opportunity to trade on both sides. Investors should look to accumulate good quality stocks in every dip. Select sectors are likely to outperform others with big margin, allocating more weightage to such sectors in the portfolio would be more rewarding over a period of time.

P.S.: This communication is for educational purpose only and does not recommend buying or selling any stock or index. Trade at your own risk.