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Global tensions keep markets choppy

ICICIdirect Research 05 Jun 2026 DISCLAIMER

Indian markets continued to remained in range with minor weakness amid geopolitical uncertainty down ~1% for the week. Broader market, largely performed in tandem with benchmarks. We continue to see this as Nifty: base building at 23100 while noting that June seasonality favours broader market
Sectors: Financials and Defense led; FMCG underperformed
As we move to the week ahead, we expect market to largely follow dynamic newsflows on geopolitical tensions, macroeconomic data releases such as Inflation for US and India alongwith FII/DII flows direction

Week that was

The index remained stuck in a 24,000–23,100 range for the fourth consecutive week. Stock-specific action continued, driven by better-than-expected corporate earnings.

What we expect:

  • Expect continued consolidation between 24,000–23,100.
  • Following an 8-session correction, Nifty forming base around lower band of consolidation (23,100). A decisive close above the previous session's high 23500 will trigger a reversal toward 24,000.
  • During past seven weeks 6% correction, market has absorbed geopolitical and domestic headwinds, forming a base for the next rally. Buy the dips, major support is at 22,700.

 

Our Constructive bias is based on following observations:

a)     Bank Nifty: Defended May lows and shows early signs of a reversal.

b)     Mid/Small-Caps: Outperforming large-caps (Nifty 500 vs Nifty 100 ratio is rising).

c)      June Seasonality (Midcap & Small cap): Historically positive 70% of the time over the last decade, averaging gains of 2.5% (Midcap) and 3.5% (Smallcap).

 

Key Monitorable:

a)     Inflation: Upcoming US and India inflation data.

b)     FII Inflows: Nasdaq, Kospi, Taiwan indices are witnessing negative divergence on the daily chart, indicating exhausted rally. The extended profit booking in these AI led indices may help to shift the FII’s interest from AI trade to growth oriented emerging markets like India

c)      Crude Oil: Any geopolitical de-escalation will cool oil prices, boosting Indian equities.

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