While domestic institutional investors (DIIs) continue to provide support, elevated volatility and weak global market cues are likely to keep traders cautious.
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Indian stock markets are likely to open negatively on Thursday amid weak global cues. While the focus has now shifted to the RBI’s monetary policy outcome, lingering US-Iran tensions continue to haunt sentiment. The fresh escalation that led to a hike in petroleum prices kept investors on tenterhooks.Ponmudi R, CEO of Enrich Money, a SEBI-registered online trading and wealth-tech firm. “While the renewal of the ceasefire agreement between Israel and Lebanon has provided some relief to regional risk sentiment, broader concerns remain unresolved. Continued hostilities between the United States and Iran, including reports of retaliatory Iranian actions following recent U.S. strikes, have kept uncertainty elevated and limited any meaningful improvement in global risk appetite.”The absence of tangible progress towards a diplomatic resolution continues to leave markets highly sensitive to geopolitical headlines, particularly given the implications for energy prices and global trade flows.Gift Nifty signals gap-down opening; RBI policy in focusThe Gift Nifty at 23,330 signals that Nifty may open down 150 points.Against this backdrop, investor attention is also firmly focused on the Reserve Bank of India’s ongoing monetary policy meeting. Market participants will closely scrutinise the central bank’s assessment of inflation, interest rates and liquidity conditions, while looking for clues on how policymakers view the impact of elevated crude oil prices and persistent global uncertainty on India’s growth and inflation outlook. Any changes in the RBI’s tone regarding future policy direction could significantly affect domestic market sentiment and sectoral positioning, he said.FII selling continues, DII support offers stabilityMeanwhile, analysts are also expecting favourable tax announcements from the Government regarding LTCG, given the massive foreign capital outflows. Foreign Institutional Investors (FIIs) have maintained an aggressive selling stance in recent sessions, with sustained outflows acting as a significant headwind for domestic equities. Their selling crossed nearly Rs 2.5 lakh crore in 2026.In contrast, Domestic Institutional Investors (DIIs) have remained consistent buyers, helping absorb a substantial portion of foreign selling pressure and providing an important source of stability for the market, he added.Derivatives data points to cautious market positioningFrom the derivatives perspective, the options data reflect a balanced-to-cautious setup.Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities, said Significant put open interest is concentrated at the 23,300 and 23,000 strikes, suggesting these levels are likely to provide immediate support. On the upside, heavy call writing is visible at 23,500 and 23,700 strikes, which may cap any recovery attempt. “The PCR stands at 0.98, indicating a relatively balanced positioning. Meanwhile, India VIX surged 6.01% to 16.28, the spike in volatility suggests traders remain cautious and are anticipating larger directional moves in the coming sessions,” he added.Weak rupee, monsoon concerns weigh on sentimentAnkur Punj, MD & Business Head at Equirus Wealth, said while markets extended losses, key benchmarks managed to erase most of their losses amid selective buying in banking and telecom stocks. While sentiment remains weak due to the sharp depreciation of the currency and subsequent FII outflows, investors will be closely watching the upcoming monetary policy announcement later this week and the RBI’s outlook on the economy and inflation, given the weak monsoon forecast.Meanwhile, equities across the Asia-Pacific region are down in early deals on Thursday, tracking overnight weakness in the US markets.Published on June 4, 2026
