As per our analysis, the market has formed strong support around the 24,600 level during Friday’s trade setup. From that level, it showed a kind of reversal movement and gained nearly 243 points in the Nifty 50.
After a sharp recovery at the end of Thursday’s session, Monday showed a kind of continuation of that trend. The market opened flat and then gradually moved higher, attempting to reach the 24,900 level. However, it once again failed to break above the 25,000 marks, as we had discussed earlier that Nifty might move within the 24,600 to 25,000 range.
Global Market Analysis
Trump put 50% tariffs on European union
Trump recently announced via social media that trade negotiations with the European Union are not going well. In response, he declared a 50% tariff on goods coming from the European Union. However, products made in America will be exempt from this tariff. This new policy is set to take effect from June 1.
We also discussed that a member of the European Union Commission confirmed similar concerns. They stated that the U.S. is expected to impose a minimum 10% tariff on all goods, without any significant adjustments. In response, the EU is planning to take reciprocal action by imposing minimum tariffs on U.S. imports. Additionally, the EU is aiming to promote free-flowing exports within the bloc to maintain internal trade balance amidst these developments.
So far, there hasn’t been any retaliation from the European Union. The key question now is how the EU will respond in detail. However, they have indicated that they are making strong preparations to rebalance the tariffs.
Russia and Ukraine change the prisoner swap
Russia and Ukraine are engaging in mutual agreements as part of efforts to reach a ceasefire. In a positive development, both countries have taken constructive steps by exchanging prisoners of war. According to reports, around 307 soldiers were swapped on the second day of the POW exchange. This is a significant move toward peace and could be a major step forward in the ceasefire process.
Despite the prisoner exchange, attacks between the two countries have not fully stopped. Reports indicate that even after the exchange, one side carried out a massive ballistic missile strike. While formal steps toward a ceasefire are still lacking, such gestures are helping to build some understanding and could pave the way for improved relations between the two nations.”
A ceasefire between Russia and Ukraine would be beneficial for India as well. Trump also tweeted that if Russia does not agree to a ceasefire or take progressive steps, the U.S. will impose strong sanctions. Such actions could impact India’s ability to import crude oil from Russia, as India currently sources more than 30% of its crude oil from Russia alone.
Trump’s sweeping tax bill – more the clarification
The U.S. House has recently passed Trump’s sweeping tax bill, which is drawing significant attention. It is estimated that the bill will add nearly $3.8 trillion to the federal debt, bringing the total to $32.36 trillion over the next decade. The bill is considered beneficial for high-income earners, while those earning less than $50,000, people with large medical expenses, and those with student loan debt are likely to be negatively impacted.”
Domestic market analysis
India overtakes japan in GDP
India has become a five trillion-dollar economy and has recently surpassed Japan to become the world’s 4th largest economy, with an economy size of nearly 4.187 trillion dollars. This has been confirmed by the CEO of NITI Aayog. Previously, there were rumours and reports suggesting that India had surpassed Japan, but this confirmation has now come officially from the NITI Aayog CEO.
We need to recognize that India is becoming a very prosperous country in the near future. This year, India is expected to achieve nearly 6.5% GDP growth, and in the coming years, it is projected to maintain around 6.3% GDP growth.
These positive steps are moving India closer to surpassing Germany within the next 2 to 3 years to become the world’s third-largest economy. Currently, the top economies are the USA, with nearly a 29 trillion-dollar economy, and China, which has recently reached an 18 trillion-dollar economy.
25% tariffs on the made in India iPhone
Trump recently stated that the US will impose additional tariffs on American companies if they sell iPhones labelled as “Made in India” in the USA. According to him, if these iPhones are made in India but sold in the US, a 25% tariff will be applied to those companies. This is the first time such a strong announcement has come directly from the US President.
Reports suggest that it is extremely difficult for Apple to manufacture iPhones within the USA. That’s why the company looks for alternatives in countries like India, which offer skilled labour at lower costs, making iPhone production more cost-effective overall.
If Apple were to shift manufacturing back to the USA, the cost of iPhones would rise significantly, which could negatively impact the company, giving competitors an opportunity to gain an advantage.
Despite all of this, reports suggest that Apple will continue manufacturing in India as operations are expected to normalize. This could also be seen as a tactical move by the US administration to create leverage in trade negotiations. Previously, the US imposed a 3.5% remittance tax, and now it’s targeting Apple’s manufacturing in India. These actions may be part of a broader strategy by the US administration to strengthen its position in trade deals by using such measures as bargaining tools.
RBI’s Big Dividend to the Government
Recently, the Reserve Bank of India (RBI) announced that it will transfer a dividend of ₹2.70 lakh crore to the Indian government. This is a significantly large amount and is expected to have a strong impact on the market when trading resumes on Monday. Reports suggest that the RBI generated this substantial income through gains from its U.S. treasury investments and also by taking advantage of the dollar’s strength when it reached around 88, possibly through short positions.
A dividend of this scale was previously given by the RBI to the Indian government in 2024, amounting to ₹2.11lakh crore. RBI has consistently provided annual dividends to the government. However, this time, it has made the highest-ever dividend pay-out in history. This development is drawing significant attention and is seen as a major positive for the Indian economy.
FII and DII Data Analysis
Foreign Institutional Investors (FIIs) are showing a neutral stance in Indian equities, with a balanced approach to buying. In Friday’s trading session, FIIs bought shares worth approximately ₹1,794 crore. On the other hand, Domestic Institutional Investors (DIIs) also made purchases worth around ₹300 crore. This combined buying support contributed to a strong rally in the market, helping the Nifty 50 gain over 200 points.
It seems that market participants are already discounting much of the expected news across various sectors. Global headlines—particularly concerning tariffs and ongoing uncertainties around trade negotiations and deals with other countries—are playing a significant role. These factors are contributing to FIIs adopting a cautious approach in the Indian equity markets.
The flow of foreign investments is currently dependent on how these negotiations and trade agreements unfold. If a positive trade deal materializes, we can expect a significant inflow of FII investments into Indian equities.
Nifty 50 technical analysis outlook for trade setup
In the previous setups, we repeatedly mentioned that on the daily timeframe, a Morning Star candlestick pattern was forming, indicating potential support. On Thursday, we observed a strong spike, and the market responded positively, forming a bullish spike candle in the setup. Following that, the market showed strength throughout the week, finding solid support and eventually bouncing back to touch the 24,900 level.
Based on the previous two consecutive days of buying, we can now identify the 25,100 level as a strong resistance. On the downside, support remains intact near the 24,600 level. This range is forming a key zone, and we may see some choppy or sideways movement in the market over the next couple of trading sessions.
Conclusion
As discussed, Nifty IT has not contributed significantly to the recent rally in the Nifty 50. On the global front, we expect some positive developments that could support market momentum. However, ongoing trade negotiations between the USA and the European Union—particularly the proposed 50% tariff on EU imports—could bring major changes. This may negatively impact the IT sector, which could be a concern for the markets.
While this poses a risk, there’s also a positive factor: India’s strong trade surplus and the record-high RBI dividend payout. However, the global developments might have a more immediate and significant impact than the RBI’s dividend announcement.
All eyes will be on Monday’s market setup to see how it reacts. Key levels to watch remain 25,100 on the upside and 24,600 on the downside.
