US–Iran talks, Crude Oil Prices, RBI's Interest Rate Decision Key Drivers for Markets This Week

New Delhi, May 31: Developments around the US–Iran situation, crude oil prices and the RBI’s interest rate decision would 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 would 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 – 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.”

In addition monthly automobile sales data for May will be released on June 1 providing insights into demand trends across the sector he said.

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 India PMI and IIP data will provide the first meaningful read on early Q1FY27 industrial momentum, Vinod Nair, Head of Research, Geojit Investments Limited said.

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