IGI Logo

Below the Quote on Daily Market Commentary for May 29th, 2026 by By Siddhartha Khemka - Head of Research, Motilal Oswal Financial Services Ltd

Benchmark indices are likely to remain range-bound next week, although select midcap and smallcap stocks could continue to outperform on the back of healthy earnings momentum and strong domestic liquidity. Some relief has emerged in global market sentiment after reports suggested a 60-day US-Iran ceasefire, raising hopes of easing geopolitical tensions and gradual normalisation of shipping flows through the Strait of Hormuz. However, investors are expected to remain cautious as mixed signals from the ongoing negotiations and recurring geopolitical flare-ups continue to keep volatility elevated across global financial markets. On Friday, Indian markets witnessed a sharp decline, with the Nifty slipping 1.5% to close at 23,547 amid broad-based profit booking, a sharp rise in the India VIX (+9.4%), and weakness across Metal and Oil & Gas stocks. The pressure intensified during the final hours of trade after the MSCI Global Standard Index rebalancing came into effect, triggering heightened volatility in select stocks amid expected passive fund flow adjustments and portfolio rebalancing activity. Adding to the pressure, lingering uncertainty surrounding the ongoing US-Iran negotiations and continued concerns over geopolitical stability in the West Asia kept overall risk appetite subdued across both global and domestic markets. While global cues have turned relatively supportive, the India Meteorological Department’s downward revision of the 2026 southwest monsoon forecast to 90% of the Long Period Average from the earlier estimate of 92%, amid rising risks of weak El Nino conditions from June onward, could emerge as a key domestic overhang for rural and agriculture-linked sectors. Additionally, RBI India has maintained a relatively resilient outlook on India’s FY27 economy, retaining its GDP growth forecast at 6.9% and inflation projection at 4.6%, while cautioning that prolonged West Asia tensions, elevated crude oil prices, shipping disruptions and increasing risks of weak El Nino conditions remain key downside risks to growth and inflation. The RBI stated that strong domestic demand and resilient financial conditions continue to support the economy; however, concerns around rising food inflation, weaker monsoon forecasts and rupee volatility could keep monetary policy relatively cautious going forward. Markets are now closely monitoring the upcoming RBI Monetary Policy meeting scheduled for June 3–5, with the policy decision expected on June 5, where the central bank is largely expected to maintain the repo rate at 5.25% amid persistent geopolitical and inflationary uncertainties. Going forward, market participants next week are expected to monitor the decision of RBI’s Monetary Policy meeting, developments in US-Iran negotiations, movement in crude oil prices and shipping activity through the Strait of Hormuz, as any escalation in geopolitical tensions could revive volatility across global financial markets.

Above views are of the author and not of the website kindly read disclaimer