RBI policy, US-Iran situation to guide market sentiment this week: Analysts

NEW DELHI, May 31: Developments surrounding the US-Iran situation, crude oil prices, and the RBI’s interest rate decision will determine the trend in the equity market in an event-heavy week ahead, analysts said.
Besides, macroeconomic data announcements, trading activity of foreign investors, and the rupee-dollar trend will act as key drivers for equities, they noted.
“Participants will closely monitor global developments surrounding the US-Iran situation and movement in crude oil prices, which continue to remain critical for inflation expectations, currency stability, and foreign flows,” Ajit Mishra, SVP, Research, Religare Broking Ltd, said.
The final HSBC Manufacturing PMI reading for May will 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, he said.
“The key event of the week will be the RBI monetary policy announcement on Friday,” Mishra added.
Additionally, investors will monitor India’s GDP growth data and foreign exchange reserves figures for further clarity on economic momentum and external sector stability, he said.
Last week, the BSE benchmark Sensex dropped 639.61 points, or 0.84 per cent, and the NSE Nifty declined 171.55 points, or 0.72 per cent.
“Markets are expected to remain highly sensitive to geopolitical and macroeconomic developments this week, with investor attention firmly focused on the evolving US-Iran negotiations, broader diplomatic developments in the Middle East, and the trajectory of crude oil prices,” Ponmudi R, CEO of Enrich Money, an online trading and wealth-tech firm, said.
Beyond geopolitics, investors are also expected to closely monitor rupee movement, institutional flow dynamics, global equity market trends, and key macroeconomic indicators for further direction, he added.
Santosh Meena, Head of Research at Swastika Investmart Ltd, said, “The primary domestic event will be the RBI monetary policy meeting, with the announcement scheduled for Friday. Market participants will closely monitor the RBI’s stance on inflation, liquidity, and interest rates amid rising inflationary concerns and currency-related developments.”
Looking ahead, the near-term directional call for Indian equities hinges on two interlocking catalysts — the RBI monetary policy decision and India’s GDP data release — while PMI and IIP data will provide the first meaningful read on early Q1 FY27 industrial momentum, Vinod Nair, Head of Research, Geojit Investments Limited, said.
US-Iran talks, oil and fed signals key drivers for gold
Gold prices will be driven by developments in the US-Iran peace negotiations, movement in crude oil prices, and macroeconomic data this week, analysts said.
Speeches from US Federal Reserve officials during the week could significantly influence interest rate expectations and determine the near-term direction for bullion prices, they added.
“Momentum for precious metals such as gold and silver still looks sideways to corrective,” Pranav Mer, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd, said.
“Focus will remain on the progress of peace talks between the US and Iran, with the ceasefire and negotiation period extended by another 60 days. A positive outcome may further weigh on oil and gold prices as safe-haven demand eases,” he added. (IANS)