Muted opening likely as GIFT Nifty trades marginally lower

GIFT Nifty:

GIFT Nifty May 2025 futures were trading 8 points lower in early trade, suggesting a flat-to-negative opening for the Nifty 50.

Economy:

India's infrastructure output, which tracks activity across eight sectors and makes up 40% of the country's industrial production, grew at 0.5% annually in April as against 4.6% in March, data from Ministry of Commerce & Industry showed on Tuesday. The Index of eight Core Industries is the measure of combined and individual performance of production of eight core industries: Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity.

India's retail inflation for farm as well as rural workers eased marginally to 3.48% and 3.53%, respectively, in April this year compared to the pace of price hikes for the two categories at 3.73% and 3.86% recorded in March. The All-India Consumer Price Index for Agricultural Labourers (CPI-AL) and Rural Labourers (CPI-RL) increased by 1 point each in April 2025 to stand at 1307 and 1320 points, respectively. The CPI-AL and CPI-RL were 1306 points and 1319 points, respectively, in March.

Institutional Flows:

Foreign portfolio investors (FPIs) sold shares worth 10,016.10 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 6,738.39 crore in the Indian equity market on 20 May 2025, provisional data showed.

According to NSDL data, FPIs have bought shares worth Rs 26091.40 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 down by 108 points, signaling a weak opening for US stocks today.

Most Asian shares traded higher on Wednesday. The Bank of Indonesia's policy decision is expected later in the day. The central bank had cut interest rates in September 2024 and again in January 2025 but has maintained rates at 5.75% since then.

In Japan, trade data for April showed a surprise deficit, as exports were impacted by stronger yen levels and increased U.S. trade tariffs. The country posted a trade deficit of 115.8 billion yen ($800 million), compared to a 559.4 billion yen surplus in March. Exports rose 2% year-on-year, a slowdown from 4% in the previous month. Imports declined 2.2% year-on-year, compared to expectations for a 4.5% drop, and contrasted with a 1.8% increase in the prior month.

In the United States, the three major indices closed lower on Tuesday. The S&P 500 declined 0.39%, the Nasdaq Composite fell 0.38%, and the Dow Jones Industrial Average lost 0.27%, as investor sentiment weakened. The technology sector fell 0.5%, with declines in major companies including Nvidia (-0.9%), AMD, Meta Platforms, Apple, and Microsoft.

Geopolitical tensions weighed on markets following reports that Israel may be planning an attack on Iran's nuclear facilities. Oil prices rose on concerns over potential conflict in the Middle East.

Additionally, comments from several Federal Reserve officials signaled continued caution regarding economic and trade-related uncertainties. Policymakers indicated that elevated tariffs could contribute to inflation and reiterated a limited scope for near-term interest rate cuts.

Domestic Market:

Benchmark equity indices ended sharply lower Tuesday, logging a third consecutive session of losses. Investor sentiment took a knock after Moody's downgraded the U.S. government's credit rating from AAA to Aa1, citing concerns over rising debt levels. Adding to the pressure, foreign institutional investors (FIIs) turned net sellers in the previous session, a rare event not seen in over a month. The S&P BSE Sensex, tumbled 872.98 points or 1.06% to 81,186.44. The Nifty 50 index declined 261.55 points or 1.05% to 24,683.90. In the past three trading session the Sensex and Nifty declined 1.63% and 1.51%.

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