Market set for positive open as RBI dividend boosts sentiment

GIFT Nifty:

GIFT Nifty June 2025 futures were trading 95 points higher in early trade, suggesting a positive opening for the Nifty 50.

Economy:

The Reserve Bank of India (RBI) on Friday handed the government a whopping Rs 2.68 lakh crore in surplus for FY25, 27% more than last year and even higher than what the Union Budget had estimated. Analysts suggest that this additional amount could support the governments objective of reducing the fiscal deficit to 4.4% for the current financial year.

Institutional Flows:

Foreign portfolio investors (FPIs) bought shares worth 1,794.59 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 299.78 crore in the Indian equity market on 23 May 2025, provisional data showed.

According to NSDL data, FPIs have bought shares worth Rs 12819.06 crore in the secondary market during May 2025 (so far). This follows their purchase of shares worth Rs 3243.03 crore in April 2024.

Global Markets:

The US Dow Jones index futures were currently up by 353 points, signaling a strong opening for US stocks today.

Asian stocks were mixed on Monday after U.S. President Donald Trump issued and then softened threats of increased tariffs on European imports over the weekend. Japanese equities extended recent gains, while technology shares across the region, particularly those supplying Apple Inc., declined.

Investor sentiment was weighed down by concerns that Trump may impose a 25% tariff on all iPhones and other smartphones manufactured overseas. The remarks added pressure to tech stocks in Asia, many of which are key suppliers in Apple's global production chain.

Broader Asian markets also tracked the losses seen on Wall Street last Friday, when Trump initially announced plans to impose 50% tariffs on European Union goods. However, on Sunday, he stated that implementation would be delayed until July 9.

Reports indicate that Japanese trade officials will visit Washington in early June for a fourth round of bilateral trade discussions. Despite ongoing talks, Japan has maintained its position that the United States should remove all existing tariffs on Japanese exports.

U.S. market ended lower on Friday following the renewed trade rhetoric. The Dow Jones Industrial Average fell 0.61%, the S&P 500 dropped 0.67%, and the NASDAQ Composite declined 1%.

In a post on Truth Social, Trump stated that he would recommend a 50% tariff on all EU imports starting June 1, citing a lack of progress in trade negotiations. He wrote, "The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with," Trump said on Truth Social social media site. "Our discussions with them are going nowhere!"

Earlier in the year, the administration had imposed a series of tariffs on EU goods, including a 25% duty on automobiles, steel, and aluminium in March, followed by a 20% tariff on additional products in April. These were later reduced temporarily to allow space for further negotiations. In response, the EU suspended planned retaliatory tariffs and proposed eliminating duties on all industrial goods traded between the two sides.

Trump also announced that iPhones sold in the U.S. would need to be manufactured domestically or face a 25% import tariff. This marked the first time in 2025 that a specific company has been singled out in U.S. trade policy. Apple shares fell more than 3% in premarket trading, contributing to a broader decline in technology stocks.

Domestic Market:

The domestic equities ended on a high note Friday, with benchmark indices clocking solid gains. The Nifty sailed past the 24,850 level, lifted by strong performances in FMCG and IT stocks. FMCG shares rallied on the back of upbeat monsoon forecasts, while IT stocks staged a smart comeback after a recent dip. Investor sentiment also got a boost from expectations of a record-high dividend payout by the RBI for FY25. The decision, expected at the central bank's board meeting on 23 May 2025, has fueled optimism around fiscal consolidation. The S&P BSE Sensex zoomed 769.09 points or 0.95% to 81,721.08. The Nifty 50 index jumped 243.45 points or 0.99% to 24,853.15.

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