The Nifty 50 Index has wavered in the past few weeks as investors book profits following the recent surge. It jumped to ₹25,110 in May, up by over 15% from its lowest point in April as concerns about tariffs eased. This article explains what to expect from the Reserve Bank of India (RBI) and the year’s top movers.

RBI interest rate decision ahead

The main catalyst for the Nifty 50 Index this week will be the RBI interest rate decision on Friday. 

Economists believe that the central bank will continue with its interest rate cuts in this meeting. Most see it cut by 0.25% in this meeting, although some analysts anticipate a jumbo cut. 

If this happens, it will be the third consecutive time that the bank has slashed rates this year. A 0.25% rate cut will bring interest rates to 6.25%. 

Analysts believe that the bank has more room to cut interest rates now that the economy is slowing. Recent data showed that the Indian economy slowed to 6.5% in the last financial year, down from 9.2% a year earlier. In a note, an analyst from the Bank of Baroda said: 

“We do believe that given the rather benign inflation conditions and the liquidity situation, which has been made very comfortable through various measures of RBI, the MPC would go in for a 25bps cut in the repo rate.”

The rising hopes for a RBI rate cut explain why Indian bond yields have plunged this year. The ten-year yield has plunged to 6.20% from the year-to-date high of 6.86%, while the 30-year has dropped to 6.76% from 7.161%. 

Bond yields often have an inverse correlation with the stock market. In most cases, falling yields push investors to the stock market, where they may earn more returns, and vice versa.

Top Indian stock movers

The most active Nifty 50 Index stock was Adani Enterprises, which dropped after a report emerged that the Justice Department was investigating it for dealing with Iranian Liquified Petroleum (LPG) products.

This will be the second major investigation that the US government has launched against the company. It also means that Gautam Adani’s strategy to have the Trump administration end its lawsuit against his company are not working.

Still, it is unclear what the implications of these lawsuits will be on the company. For many firms, it would be ending of access to the US market, a place where Adani Enterprises is not involved. It may also be sanctioned or fined. 

The top-performing Nifty 50 index companies this year are the likes of Bharat Electronics, Bajaj Finance, SBI Life Insurance, HDFC, and Tata Consumer Products. All these stocks have jumped by over 23% this year. 

On the other hand, the top laggards are firms like Trent, Wipro, Infosys, Tata Consultancy, and IndusInd Bank. 

Nifty 50 Index technical analysis

The daily chart shows that the Nifty 50 Index bottomed at ₹21,745 on April 7 this year as Donald Trump’s tariffs roiled the market. It then formed a golden cross on May 2 as the 50-day and 200-day moving averages crossed each other. 

The index is now in the process of forming a bullish pennant pattern, which happens when there is a vertical line and a symmetrical triangle. In most cases, this pattern usually leads to a strong bullish breakout. 

Therefore, the index will likely continue rising as bulls target the next key resistance level at ₹26,280, up by 6.3% from the current level. A drop below the 50-day moving average at ₹23,690 will invalidate the bullish outlook.

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Singapore, which has historically depended on gas for its energy supply, is now exploring regional grid connections. 

The strategy primarily involves utilising subsea cables to establish links between national grids, thus facilitating electricity trading across borders, Rystad Energy said in a report on Tuesday.

This strategic transition is intended to speed up the process of decarbonisation and separate local electricity costs from the fluctuations of the international gas market.

Decarbonisation and cost benefits

Rystad Energy research suggests that realising all proposed interconnections to Singapore could stimulate over $40 billion in regional investments for renewable and energy storage projects. 

This development could unlock up to 25 gigawatts (GW) of hydropower, solar, and offshore wind capacity.

Singapore’s strategic location allows it to function as a pivotal green energy center, facilitating connections with neighboring countries via regional power grids. 

“Singapore stands to benefit the most from Southeast Asia’s emerging regional grid, but realizing these gains will require coordinated, win-win cooperation with supplier countries, many of which may see limited direct advantage in linking up with another market,” Raksit Pattanapitoon, lead renewables & power analyst (APAC), Rystad Energy, said in the report.

For the island nation, importing electricity through these networks offers a financially viable approach and has the potential to lower emissions by up to 13 million tonnes of carbon dioxide equivalent annually, assuming the completion of all proposed initiatives, according to Rystad Energy.

This strategy offers not just significant decarbonisation benefits, but also strengthens Singapore’s energy security by enabling a wider, cleaner energy mix, thereby furthering the nation’s sustainability objectives, the Norway-based energy intelligence company said.

Singapore’s electricity mix

The Iberian Peninsula’s recent blackouts highlighted the crucial need for grid resilience to be prioritised. Also, fragile grids and inadequate storage often cause large power failures.

Pattanapitoon added:

Singapore can address both vulnerabilities by deepening regional integration and tapping into neighboring renewable resources, helping scale a resilient regional grid and strengthening energy security.

Singapore’s electricity production is overwhelmingly dependent on natural gas, making up 96% of its power sources. 

The nation primarily utilises combined-cycle gas turbine (CCGT) plants, which are designed for power reliability. 

These CCGT plants operate through a two-step process: initial electricity generation comes from burning natural gas, followed by the utilisation of the resultant hot exhaust to create steam, which powers a second turbine.

CCGT plants are known for their reliability and cost competitiveness. 

Economical options

However, research conducted by Rystad Energy, which focused on the levelised cost of electricity (LCOE), indicated that sourcing electricity through ASEAN interconnectors might be a more economical choice than developing new CCGT facilities domestically.

“Current cost analyses indicate these hybrid systems could deliver lower LCOEs than many in the industry currently anticipate. Singapore, strategically positioned at the heart of this evolving energy system, stands to gain significantly,” Nevi Cahya Winofa, analyst, renewables & power research, Rystad Energy, noted.

In Singapore, the Electricity Market Authority (EMA) is instrumental in guaranteeing a consistent supply of imported low-carbon electricity.  

Current regulations mandate that projects reach a minimum annual load factor of 60% within five years of operation. This ensures a stable and dependable power source for the country.

Though developers target a minimum load factor, there’s significant financial motivation to surpass it. 

Enhancing load factors

Enhancing the load factor target, moving from 60% to 100%, can notably decrease the LCOE.

This reduction is achieved by more efficient transmission cost distribution and realising capital expenditure savings through increased scale.

Significant cost optimization gains are especially pronounced in countries like Malaysia (Sarawak), Cambodia, and Vietnam due to lengthy transmission distances exacerbating the benefits, Rystad said.

Optimised solar-plus-storage hybrids with appropriately sized battery energy storage systems can achieve over 90% load factors technically and economically. 

Integrating these technologies with backups can meet Singapore’s EMA reliability standards and be comparable to other dispatchable energy sources.

Winofa said:

As it engages in discussions with its neighbors, the country must proactively identify and secure unique advantages to maximize shared value in the potential establishment of a regional power grid.

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European stock markets experienced a reversal in early trading on Tuesday, with the pan-European Stoxx 600 index turning lower after an initially positive start.

The renewed caution among investors was largely attributed to the resurfacing specter of US tariffs, following President Donald Trump’s recent pronouncements, even as market participants keenly awaited key inflation data from the eurozone which could influence the European Central Bank’s upcoming policy decision.

Shortly after the opening bell, European equities had shown some resilience, but this momentum proved short-lived.

The Stoxx 600 benchmark was trading 0.2% lower by 8:30 a.m. in London.

This negative sentiment was mirrored across major national bourses, with the UK’s FTSE 100, France’s CAC 40, and Germany’s DAX all retreating by approximately 0.1%.

The primary catalyst for this shift in mood was the return of US tariff concerns to the forefront of investors’ minds.

This follows President Donald Trump’s statement on Friday that he intends to double tariffs on steel imports from 25% to 50%, effective June 4.

This development has rekindled fears of escalating global trade tensions.

Additionally, investors are closely monitoring any new developments in the ongoing trade talks between the US and China, which appeared to sour last week.

However, a glimmer of potential dialogue emerged when National Economic Council Director Kevin Hassett suggested on Sunday that President Trump and China’s President Xi Jinping could have a conversation as soon as this week.

Inflation data and ECB policy in the spotlight

Investors in Europe are particularly focused on the latest inflation data from the eurozone, due for release today.

Flash data from the single currency area is widely expected to show that inflation cooled towards the European Central Bank’s 2% target in May.

Such a reading would likely pave the way for the ECB to deliver a widely anticipated 25 basis point interest rate cut at its next monetary policy meeting on Thursday.

It’s worth noting that eurozone inflation held steady at 2.2% in April, missing market expectations for a move lower, making today’s figures all the more crucial.

Global market backdrop: US futures dip, Asia mostly higher

Across the Atlantic, US stock futures slipped on Tuesday morning, following a positive start to June’s trading on Monday.

In Monday’s regular session, the S&P 500 climbed 0.41%, the Nasdaq Composite advanced 0.67%, and the Dow Jones Industrial Average added a modest 35.41 points, or 0.08%.

US stocks had ended Monday higher despite rising tensions between China and the United States, after Beijing countered President Trump’s accusations that it had violated a temporary trade agreement.

Investors had previously grown hopeful that the two economic giants could work out a trade deal, but recent developments suggest negotiations may be taking a turn for the worse.

Meanwhile, Asia-Pacific markets mostly rose overnight. This positive sentiment in Asia was partly attributed to data from China showing that manufacturing activity in May shrank at the fastest pace since September 2022, according to a private survey.

The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) came in at 48.3, missing Reuters’ median estimate of 50.6 and dropping sharply from 50.4 in April.

This weaker-than-expected reading was influenced by a sharper decline in new export orders, highlighting the impact of prohibitive US tariffs.

In corporate news, Swiss bank Julius Baer announced plans to cut costs by an additional 130 million Swiss Francs (158.8million) by 2028 as part of its on going strategic review.

The bank stated that these new savings will be inaddition to its existing target to lower expenses by 110 million Swiss Francs (134 million), which was initially announced in February. Julius Baer now expects to exceed that original target by 20 million Swiss Francs.

Analysts largely welcomed this updated strategy from the bank’s new chief executive, Stefan Bollinger, who assumed control at the start of this year.

“The words discipline/disciplined appear a total of 19 times in the Strategy Update presentation from Julius Baer under new CEO Stefan Bollinger and this is giving the right messaging to all stakeholders given the issues over the past years, in our view,” commented JPMorgan’s Amit Ranjan in a note to clients.

Julius Baer also revealed its plans to increase gross profit margins, assets under management, and the return on its CET1 (Common Equity Tier 1) reserves.

However, some analysts noted a degree of caution in the targets.

“While targets appear conservatively struck and imply earnings below consensus, this makes sense but is likely to require evidence of a better outcome and buybacks to resume to see earnings growth and upgrades coming through,” said RBC Capital analyst Anke Reingen.

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The Vietnamese Agriculture Ministry announced on Tuesday that domestic companies plan to sign memorandums of understanding with US partners to purchase $2 billion in American agricultural goods, according to a Reuters report. 

This initiative is aimed at advancing a new trade agreement between Vietnam and the US.

US President Donald Trump’s administration had imposed substantial “reciprocal” tariffs on Vietnam, reaching a significant 46%. 

This measure has introduced considerable uncertainty into Vietnam’s economic outlook. 

While these tariffs are currently suspended until July, their potential activation presents a serious threat to Vietnam’s established growth model. 

This model is heavily dependent on exports, particularly to the US, which remains Vietnam’s primary and most crucial export market. 

The reimplementation of these tariffs could severely disrupt trade flows and negatively impact Vietnam‘s economic performance. 

The situation highlights the vulnerability of export-oriented economies to shifts in international trade policies and the potential consequences of trade disputes between major economic powers. 

New deals

During a recent diplomatic visit to the United States, a high-powered Vietnamese delegation, consisting of 50 prominent companies and spearheaded by agriculture minister Do Duc Duy, solidified several new trade agreements aimed at bolstering economic ties between the two nations. 

A key highlight of this visit was the signing of five Memorandums of Understanding (MoUs). 

These MoUs specifically pertain to the procurement of agricultural products from the state of Iowa. 

As per the directives outlined in these agreements, Vietnam has committed to purchasing a substantial $800 million worth of goods from Iowa over the span of the next three years. 

The visit itself served as a platform for Vietnamese businesses to engage directly with their American counterparts, fostering collaboration and paving the way for future cooperation across various sectors.

According to the report, memoranda of understanding with Iowa encompass acquisitions of corn, wheat, dried distillers grains, and soybean meal.

Trade deficit

Recent discussions between Vietnam and the Trump administration have centered on establishing a mutually agreeable trade framework, driven by the substantial trade imbalance favoring Vietnam.  

As part of these ongoing negotiations, Vietnam has committed to increasing its intake of goods originating from the US. 

This pledge is a direct response to the persistent and widening trade gap that has become a key point of contention. 

The scale of this deficit is notable; in the preceding year, the US recorded a staggering trade shortfall of $123 billion in its economic exchanges with Vietnam. 

Other measures

This deficit underscores the urgency and importance of finding a balanced solution through these trade talks, aiming to ensure a more equitable flow of goods between the two nations.

Last year, Vietnam imported $3.4 billion in agricultural goods from the US, while exporting $13.68 billion worth of its own agricultural products to America, according to the Vietnam News Agency.

Vietnam has committed to purchasing additional American goods, such as Boeing aircraft and liquefied natural gas. 

Moreover, following US allegations of Vietnam being a significant center for counterfeit goods and digital piracy, the nation has vowed to take action against these illegal operations.

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The KOSPI Composite Index has embarked on a strong rally in the past few months as South Korean shares surged. The index, which tracks the biggest South Korean companies, rose to KRW 2,720, its highest point since August 26, and 18% above the lowest point this year. 

Interest rate cuts have driven South Korean stocks

South Korean stocks have jumped this year even as some of the biggest companies are exposed to the United States, where Donald Trump has applied substantial tariffs. Some of the most exposed companies are giants like Hyundai, Samsung, and LG.

One reason for the rally is that investors believe that the two countries will reach an agreement later this year. South Korea was one of the first countries to reach out to the Trump administration for a deal.

South Korean stocks have also soared as the political environment has cooled a bit in the past few months. Political temperatures rose a few months ago after the then-president declared a state of emergency. 

Further, the South Korean central bank has been more dovish in the past few months. It slashed interest rates last week by 0.25% to 2.75%, down from last year’s high of 3.50%. It has been slashed five times since last year. 

Interest rate cuts boost the stock market by lowering the country’s bond yields. Data shows that the ten-year yield has been in a downward trend in the past few months. It was trading at 2.80%, down from the year-to-date high of 3.08%. The 30-year yield has also dropped to 2.67% from the year-to-date high of 2.85%.

It has slashed interest rates because analysts anticipate that the South Korean economy will continue slowing. The risk, however, is that inflation has remained stubbornly high in the past few months. Recent data shows that the headline CPI remained at 2.1% in April, up from 1.3% earlier this year.

Read more: Trump’s tariff hikes cause steel stocks to fall across Asia

Most KOSPI companies hitting 52-week highs

The KOSPI Index remains significantly below the highest point in 2024 even as more companies are hitting their 52-week highs. Data shows that more companies in the index are hitting the highs today more than at any point in the past few years. 

Over 90 firms have moved to this high, and many more could join the group in the coming weeks. This rally underscores that investors believe that smaller companies will do better in the future. Samsung, the biggest South Korean company, now accounts for 16% of the index, down from 20% earlier this year.

The best-performing companies in the KOSPI Index are the likes of Hyundai Rotem, MNC Solution, Hanwha, HD Hyundai Energy Solutions, and Hyundai Engineering, have all surged by over 100% this year.

KOSPI Composite Index analysis

The daily chart shows that the KOSPI Composite Index bottomed at KRW 2,285 in April and then rebounded to KRW 2,720 in May. It has already crossed the important resistance point at KRW 2,680, its highest point on February 1. 

Moving above that level meant that investors had prevailed. The index has also formed a golden cross pattern, which happens when the 50-day and 200-day moving averages cross each other. 

It has jumped above the 61.8% Fibonacci Retracement level, a sign that bulls are in control. Therefore, the index will likely continue rising as bulls target the key resistance level at $2,800, up by 3.8% above the current level. A move below the 50% retracement level will invalidate the bullish outlook.

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