Bulls & bears play tug of war in June over last 10 years. Should you stay put or take a vacation?

Time of India

30-05-2025

June is typically a seasonally neutral month for
Indian stock markets
. Over the past 10 years, India's heartbeat index, Nifty, has ended the month in positive territory five times, while posting declines in the remaining years.
The Nifty's strongest June performance came in 2020, amid the COVID-19 lockdown, with a 7.5% gain. More recently, the index posted solid gains of 6.6% in 2024 and 3.5% in 2023.
The said month's returns in 2016 and 2021 stood at 1.6% and 0.9%, respectively.
On the five occasions when it closed in the red were in 2015 (-0.8%), 2017 (-1%), 2018 (0.2%), 2019 (-1.1%) and 2022 (-4.9%).
FII/DII data
So far in 2025, foreign institutional investors (FIIs) have been net sellers in the first three months while remaining net buyers in April and May when they bought domestic shares worth Rs 4,223 crore and Rs 21,618 crore, respectively.
.The FIIs have remained net buyers in June on seven occasions, viz. 2016, 2017, 2019, 2020, 2021, 2023, and 2024. In 2023, FIIs bought domestic equities worth Rs 47,148 crore, which remains the highest over the last 10 years. It is followed by 2024 and 2020, when they purchased shares worth Rs 26,565 crore and Rs 21,832 crore.
The three occasions when FII were net sellers were 2015, 2018, and 2022, when they sold shares totalling Rs 3,344 crore, Rs 4,831 crore, and a whopping Rs 50,203 crore.
The Domestic Institutional Investors (DIIs) were net buyers on 9 occasions and net sellers just once in 2016 at Rs 2,174 crore. Their highest buying was recorded in 2022 at Rs 46,599 crore. It was followed by 2024 and 2018 when they shopped for shares amounting to Rs 28,633 crore and Rs 14,146 crore, respectively.
Nifty rollover data
The rollover of Nifty futures rose to 79.10% in the May series, slightly higher than April's 79.08% and above the three-month average of 78.09%, SBI Securities said in a note. "This marginal increase in rollover activity, especially amid a narrow-range series, reflects traders' willingness to carry forward their positions, possibly in anticipation of a breakout move. It indicates sustained interest and confidence in the market's underlying structure, hinting at a potentially more active and volatile June series," the SBI Sec note said.
The number of shares rolled over surged to 149 lakhs compared to 128 lakh last month, though the rollover cost dipped to 0.52%, below the three-month average of 0.61%.
In the new series, the FII long-short ratio dipped sharply to 19.71% at the start of the June series, indicating a cautious stance with reduced long exposure. While this reflects near-term uncertainty, such extreme positioning can act as a contrarian signal, suggesting that any upside move may trigger short covering, potentially accelerating momentum, the SBI Securities note added.
Nifty on charts
The benchmark index Nifty has been consolidating within a broad range of 25,116–24,462 over the past 13 trading sessions, reflecting market indecision and a lack of clear directional momentum. This extended phase of sideways movement suggests that both buyers and sellers are waiting for a strong trigger before committing to a larger move.
SBI Securities expects the zone of 25,050-25,100 to act as an immediate hurdle for the index and any sustainable move above the level of 25,100 will lead to a sharp upside rally up to the level of 25,500, followed by 25,700 in the short term.
On the downside, the brokerage expects a zone of 24,550-24,500 to act as crucial support for the index and any slip below the level of 24,500 will lead to the next support zone of 24,150-24,100.
What should investors do?
Expert VK Vijayakumar, Chief Investment Strategist, Geojit Investments expects the ongoing consolidation phase to likely continue in the near term. In his view, the cues for investors are India's macros and corporate earnings. In the former case, the situation remains strong and is only improving. However, in the latter case, the positive trend in macros is not getting reflected in corporate earnings.
"This is the fundamental reason for the range-bound movement of the market. FY25 Nifty earnings growth was a pedestrian 5.5%, and the projection for FY26 is around 10%. A valuation multiple of 21 for 10% earnings growth is certainly on the higher side. This will cap the upside to the Nifty until leading indicators suggest a recovery in earnings growth," Vijayakumar said.
Exuding confidence, the Geojit analyst said that steadily improving macros like resilient GDP growth, downtrending inflation, interest rate cuts, and declining fiscal and current account deficits could lay the foundation for a strong economy and eventual earnings recovery in the medium term. He suggested investors remain invested and buy quality stocks on dips.
(Data Inputs from Ritesh Presswala)
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Disclaimer
: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)