RBI Policy Aftermath: Markets React with Short Covering | 06 June 2025
By CapitalKeeper | Nifty & Bank Nifty | Indian Equities | Market Moves That Matter
Indian Stock Market Update: Short Covering Pushes Indices Higher Post-RBI
The Reserve Bank of India (RBI) announced its latest monetary policy today, and while rates remained unchanged as widely expected, the commentary around liquidity and future inflation targets sparked a dynamic shift in intraday sentiment.
As the policy details settled in, the Indian markets witnessed strong short covering in the final 15 minutes of trade—especially on the Call (CE) side, indicating a sudden shift in trader sentiment.
🔍 RBI POLICY HIGHLIGHTS
- Repo Rate: Maintained at 6.50%
- Stance: Remained focused on withdrawal of accommodation
- Inflation View: RBI projects FY26 CPI Inflation near 4.5%
- Growth Outlook: FY26 GDP target maintained at 7%
- Liquidity: Gradual normalisation hinted, no CRR hike
📌 Conclusion: Dovish to Neutral undertone, paving way for a liquidity-driven rally if global cues support.
🔄 Market Reaction: Volatility Eased, Bulls Took Charge
🔥 Short Covering Rally
In the last 15 minutes of the trading session, Call writers rushed to cover positions, leading to:
- Sudden price spikes across index heavyweights
- Bank Nifty reclaiming key intraday levels
- Nifty closing near day’s high, a strong bullish signal
💹 Nifty 50 Technical View (Closed near 24850)
📈 Breakout Trigger
Above 24860, especially on hourly close, opens doors for a bull run toward:
- Resistances: 24930 / 25030 / 25070 / 25210+
📉 Support Levels to Watch
- 24710 / 24620
- 24480 / 24400
⚠️ Breakdown only below 24400; till then, trend remains Buy-on-Dips
🏦 Bank Nifty View (Closed near 55900)
- Supports: 55500 / 55200 / 54850
- Resistance Zones: 56100 / 56300 / 56700
📈 Strong recovery confirms short unwinding; follow-through above 56100 may confirm bullish continuation.
📊 Sector Snapshot
| Sector | Outlook | Remarks |
|---|---|---|
| PSU Banks | 🔼 Bullish | Strong bounce post-policy |
| Private Banks | 🔼 Positive | Axis, ICICI, HDFC Bank active |
| Auto | 🔼 Bullish | Tata Motors, M&M showed momentum |
| Energy/Power | 🔼 Bullish | NTPC, PowerGrid showing strength |
| FMCG | ⚠️ Stock Specific | Mixed reactions to policy impact |
⏱️ What Traders Should Watch Now
- Sustain above 24860 = momentum continuation
- Hourly closing confirmation above resistance = positional longs
- Follow global cues & US bond yields for extended bullish setup
🧠 Pro Tip for Traders:
“Post-policy volatility can be deceptive. Always wait for confirmation on hourly charts for fresh entries.”
📌 SEO Keywords:
- RBI Policy Market Reaction
- Nifty After RBI Policy
- Short Covering in Indian Markets
- 06 June 2025 Stock Market Update
- Post-RBI Technical Breakout Levels
📢 Stay tuned for tomorrow’s opening bell outlook and stock-specific breakout scans.
🖊 Written by CapitalKeeper.in – Decoding Markets, Daily
🔐 Disclaimer: This article is for informational purposes only. Please consult a SEBI-registered financial advisor before making any investments.
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📢 Final Note
The market may witness intraday volatility due to SENSEX weekly expiry. Despite a dip in FII long positions and PCR values, the Buy-on-Dips strategy remains valid only above 24600 (Nifty). Traders should monitor support-resistance zones closely and manage risk near volatile trigger points like 25100 (Nifty).
Stay tuned for intraday trade updates and sector rotation cues throughout the day.
🖊 Written by CapitalKeeper.in – Your Daily Dose of Smart Market Insight
🧠 CapitalKeeper’s Takeaway
- Watch out for price action around 24,800 – it’s the key wall to climb.
- A clean breakout with volume above this congestion zone may fuel momentum towards 25,113+, completing the Wolfe Wave target.
- Maintain a disciplined stop-loss strategy around major intraday supports and don’t chase breakouts blindly in this volatility.
- Stock-specific trades in Auto, Railways, and Banks are likely to offer short-term momentum.
📢 Stay tuned to CapitalKeeper.in for more real-time updates and actionable insights throughout the trading day.
Conclusion:
The Indian equity markets are currently navigating through mixed signals, with Nifty 50 showing signs of consolidation, Bank Nifty exhibiting neutral momentum, and Fin Nifty displaying cautious optimism. Traders and investors should monitor key support and resistance levels, along with global economic developments, to make informed decisions.
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