Stock Market Next Week: Will Nifty Break Out or Stay Range-Bound? Experts Decode Market Trends

Indian equity markets closed May on a subdued tone, with the Nifty ending the week at 24,750.70 and the Sensex at 81,451.01, marking a phase of low volatility and consolidation for the second consecutive week.

Despite the narrow trading range, the indices managed to finish the month in green, extending a three-month streak of gains.

Investor sentiment remains cautious amid multiple macroeconomic and geopolitical factors.

"The market is currently in a wait-and-watch mode. With no decisive triggers in play, we are witnessing low volatility and a tight trading range," said Sudeep Shah, Deputy VP and Head of Technical & Derivatives Research at SBI Secuies.

Nifty’s Technical Set-Up: Ready for a Move?
May’s narrow 1,180-point trading range for Nifty—the tightest in 10 months—indicates that a significant breakout or breakdown could be on the horizon.

"Such phases of low volatility often precede sharp moves. The Nifty Futures rollover rose to 79.10%, marginally higher than April’s 79.08%, and above the three-month average of 78.09%, signaling sustained interest from traders," Shah explained.

Key Nifty Levels to Watch:
Resistance: 25,050–25,100
Upside Targets: 25,500, 25,700
Support: 24,550–24,500
Deeper Support: 24,150–24,100 (50-day EMA)

If the index manages a sustained move above 25,100, a sharp rally may ensue. However, if it breaks below 24,500, further correction towards the 50-day EMA zone is likely.
 

Bank Nifty: Quiet Strength, Ready to Explode?
Bank Nifty, which has moved sideways for the past 26 sessions, may be on the verge of a cup pattern breakout on the daily chart. The index has digested previous gains without showing signs of weakness, holding firm above both short- and long-term moving averages.

"A breakout above the 56,000–56,100 resistance zone can spark a rally toward 56,900 and 57,600," said Shah. On the downside, immediate support lies at 55,050–54,950, with a further safety net at 54,400.

Rollover in Bank Nifty Futures also rose significantly to 79.29%, compared to April’s 75.05%, indicating growing conviction among market participants as the June series begins.

Seasonality Hints at June Optimism
Historical data suggests a positive bias for June:
Nifty: Positive in 11 of the past 18 years, average gain of 4.19%
Bank Nifty: Positive in 11 of 18 years, average gain of 4.52%
June Volatility: 7.80% (Nifty), 9.30% (Bank Nifty)

These patterns suggest that despite recent consolidation, historical trends point to a possible rally in June.

Sectors to Watch: PSU Banks, Defence, Chemicals, Realty
Rollovers and technical indicators suggest that Banking (Private & PSU), Capital Markets, Chemicals, Defence, PSEs, and Realty are likely to outperform next week.
Among them, the Nifty PSU Bank index is already showing a strong breakout. "It has moved above its short and long-term moving averages, both in a rising trajectory. This signals strength and a likely continuation of the rally," Shah said.

Outperforming Stocks:
Union Bank, Canara Bank, Bank of Baroda
NBCC, HUDCO, CDSL, Manappuram, Abcapital
ITCHOTEL

Top Stock Picks for the Week:
PNB: Breakout with volume support; accumulate at Rs 105–106 with target Rs 113–116 and stop-loss at Rs 102.
ITCHOTEL: Bullish trend with strong RSI and volume rebound; buy at Rs 215–217 with target Rs 232–238 and stop-loss at Rs 209.

Midcaps and Smallcaps Lead the Charge
May saw strong performance from broader market indices:
Nifty Midcap 100: +6.09%
Nifty Smallcap 100: +8.72%
Both indices closed green for three consecutive sessions, indicating robust buying momentum.

"Their ratio charts are forming higher highs and higher lows against Nifty, signaling sustained outperformance," said Shah.

Macroeconomic Cues: RBI, GDP, and Global Trade Tensions
According to Sugandha Sachdeva, Founder of SS WealthStreet, "The Nifty fell 0.41% for the week, largely due to global trade tensions and rising US treasury yields. However, RBI’s record Rs 2.68 lakh crore dividend payout and India overtaking Japan as the 4th largest economy added positive cues."

India’s GDP growth hit 7.4% in Q4 FY25, the highest in four quarters. Meanwhile, FII net inflows stood at Rs 1,376.23 crore for the week ending May 30.

"The dividend from RBI is 27% higher than last year and more than what the Union Budget had projected. It boosts the government’s ability to manage fiscal deficit and supports market confidence," Sachdeva added.

Read More - Cues to Watch Out for Next Week: RBI Policy & FII Trends In Focus

US Tariffs & RBI Policy in Focus
While domestic triggers look supportive, global concerns still weigh heavily. The reinstatement of Trump-era tariffs and the latest move to double tariffs on steel and aluminum from 25% to 50% starting this Wednesday has created unease.

"The tariff war is back. Markets will be closely watching how this trade standoff evolves. The decision was reversed briefly but has now been reinstated," said Sachdeva.

Investors are also looking toward the RBI’s monetary policy on June 6, with expectations of a 25 basis point rate cut. This move, if realized, is expected to stimulate credit growth and consumption.

On the global front, market participants await:
US Non-Farm Payrolls
ECB Interest Rate Decision
US ADP Employment Data
US Unemployment Rate
These indicators will provide further cues on global monetary policy trajectories.

Key Levels To Watch
‘In terms of the key levels, Rs 24,400 remains a very strong support area for the benchmark index. As long as that is holding, we have a positive view. However, having said, Rs 25,100-200 area remains a strong resistance zone. Unless that is breached, further gains look quite unlikely for the next week. We largely see the focus being on the trade tensions, because President Trump has threatened to increase the tariffs on steel and aluminum imports to 50% from the current 25% next week. Trade war uncertainties are likely to dominate the market sentiments going forward as well. So, we expect a phase of consolidation to continue for the week ahead,’ said Sachdeva.

The Verdict: Cautious Optimism with a Breakout on the Horizon?
The coming week in Indian stock markets hinges on whether Nifty and Bank Nifty can break out of their consolidation zones amid strong technical support, macroeconomic optimism, and potential policy cues from the RBI.

The tariff war and global data could introduce volatility, but with historical seasonality, strong sectoral rollovers, and increasing FII inflows, the balance of probabilities may tilt toward an upside breakout, provided key resistance levels are breached.

Disclaimer

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