Indian markets likely to open flat with negative bias amid global uncertainty

Indian markets are poised for a flat opening with a negative bias, as indicated by the current GIFT Nifty levels.

Indian markets are likely to open the new week on a flattish note with a negative bias. Gift Nifty is ruling at 24,915 against Nifty May and June futures values of 24,880 and 24,972.80, which indicates a flat opening. Analysts expect to remain in the consolidation phase and expect some moderation in the current pullback rally. F&O settlement week (NSE monthly contacts are expiring this Thursday) will keep individual stocks volatile, they said.

Puneet Singhania, Director at Master Trust Group, said  Markets are likely to remain influenced by a mix of global and domestic cues. Volatility may rise amid the expected announcement of a new US tax policy, which could impact global investment flows in the long run. On the domestic front, the Q4 FY25 earnings season is a key focus, with investors closely tracking management commentary and sectoral trends. “The release of India’s Q1 FY25 GDP data, expected at 6.0% YoY, will be a crucial indicator of economic momentum. Additionally, other factors like possible progress in the India-U.S. trade deal and comments from Fed Chair Jerome Powell will also play a role in shaping market sentiment,” he added.

Analysts are also closely watching FPI inflows.

FPI flows in May 2025 to date were positive for all key emerging markets (except Thailand). India, Brazil, Indonesia, Malaysia, Philippines, South Korea, Taiwan, and Vietnam witnessed inflows of US$2,253, US$1742 mn, US$210 mn, US$486 mn, US$5 mn, US$722 mn, US$8,117 mn, and US$145 mn, respectively, said Shrikant Chouhan, Head Equity Research, Kotak Securities. According to him, FPI flows are expected to remain volatile. “The Q4FY25 earnings season remains uninspiring, with aggregate earnings growth of the Nifty-50 Index at 5.8% yoy till now. Meanwhile, global markets ended mixed. Moody’s downgrade of the US credit outlook and renewed fiscal concerns in major economies, coupled with mixed economic cues from China, kept the markets on edge,” he added.

Meanwhile, market experts welcome the RBI’s largesse to the Government. 

The RBI has announced a record dividend of Rs 2.68 lakh crore to the Centre for FY25 (vs Emkay’s estimate of Rs3.2trn), which is around 28% higher than the Rs 2.1 lakh crore assumed in the FY26 Union Budget. This marks the third consecutive year where the actual dividend has exceeded the initial budgeted number, albeit the surprise is modest (compared to 2.6x in FY25 and 2.4x in FY24 vs initial budgeted). “This implies an extra fiscal boost of about 0.15% of GDP. The lower-than-expected surplus transfer appears to be largely on account of the RBI revising the risk provisioning range under the Contingent Risk Buffer (CRB) from 6.5-5.5% to 7.5-4.5% of the balance sheet, effectively raising the CRB for FY25 to 7.5% (from 6.5% earlier),” said Madhavi Arora, Economist, Emkay Global.

F&O trading turns mildly bullish, according to derivative experts.

Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities, said interestingly, in the derivatives space, FPIs are still holding on to their short bets, showing no sign of retreat yet, he said. “The tone in the F&O market has turned cautiously optimistic. While put writers have reinforced their presence at lower strikes, call writers are showing a slight upper hand—but interestingly, they’re migrating higher in search of safer territory, which is a bullish undertone,” he added.

Meanwhile, Asian stocks are mixed in early deals on Monday.

Published on May 26, 2025