RBI's monetary policy measures expected to propel Nifty beyond the 25,100 resistance level

All Aboard? RBI’s measures are expected to propel the Nifty beyond the 25,100 resistance towards its previous highs of 26,200.

The Indian stock market experienced a notable rally on Friday. The catalyst for this upward movement was the RBI’s surprise decision.

The RBI reduced the repo rate by a higher-than expected 50 basis points to 5.5%, marking its third rate cut of 2025. Besides, MPC also decided to reduce the cash reserve ratio (CRR) by 100 basis points to 3% from 4%.

These measures aimed to stimulate economic growth and enhance liquidity, thereby bolstering investor sentiment across various sectors.

The U.S. stock market rebounded, with the S&P 500 up 1.5%, the Dow gaining 1.2%, and the Nasdaq rising 2.2%, marking its fourth positive week in five. This recovery was fuelled by a stronger-thanexpected May jobs report, which showed 139,000 new jobs added and a steady 4.2% unemployment rate, despite a decline in labour force participation.

Asian stocks opened higher Monday with the US and China set to resume trade negotiations, while positive jobs data in the world’s largest economy eased recession fears.

Top trade negotiators from the US and China are set to hold fresh talks in London today, offering a glimmer of hope that the world’s two largest economies can defuse tensions over Chinese dominance in rare-earth minerals.

Rate-sensitive sectors responded enthusiastically to the announcement, reflecting a renewed sense of investor confidence. This stimulus could propel Indian equity markets beyond their current trading range, potentially pushing the Nifty past 25,000 and toward previous highs of 26,200. Nifty posted a strong close and is on the verge of breaking above its recent swing high of 25,116. A sustained move above this level could propel the index toward 25,307, marking a 78.6% Fibonacci retracement of the full swing from 26,277 to 21,743. On the downside, 24,845 may offer near-term support.

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Source: HDFC Securities Prime Research