Indian Markets Surge on Global Optimism and Domestic Economic Milestones
Indian equity benchmarks witnessed a strong rally in early trade on Monday, as the Sensex jumped more than 700 points and the Nifty crossed the 25,000 milestone for the first time. The surge was powered by a combination of positive global developments and robust domestic indicators, with investor sentiment buoyed by the delay in US tariffs on EU imports, confirmation of India’s status as the world’s fourth-largest economy, a record RBI dividend, and hopes of another repo rate cut in June.
At 10:30 AM, the Sensex was trading at 82,092.64 after briefly touching an intraday high of 82,492.24, up 771.16 points or 0.94 percent. The Nifty was seen around 24,954.45, having earlier peaked at 25,079.20, up 226.05 points or 0.90 percent. Among the top gainers were Mahindra & Mahindra, Tata Motors, Hero MotoCorp, Nestle India, and Bajaj Auto, each rising up to 2 percent.
Highlights:
Sensex peaks at 82,492.24; Nifty crosses 25,000 before paring gains.
Strong buying seen in auto, FMCG, and banking stocks.
Market gains driven by global relief, robust macro data, and policy optimism.
US Tariff Delay Eases Global Trade Fears
The decision by US President Donald Trump to delay the imposition of a 50% tariff on European Union imports until July 9 had an immediate calming effect on global markets, including India. Investors viewed the move as a signal that Washington is open to further negotiations, thereby reducing fears of a major disruption in global trade flows. US stock futures surged overnight, with European and Asian equities also showing strength.
This external development helped improve risk appetite across emerging markets, with India among the primary beneficiaries due to its relative macroeconomic stability and high foreign fund inflows.
Highlights:
Trump’s postponement of EU tariffs lifts global equity sentiment.
Market expects negotiations to resume, reducing geopolitical overhang.
Risk-on mood supports equity inflows into emerging markets like India.
India Confirmed as Fourth-Largest Economy with $4 Trillion GDP
Investor sentiment received a domestic boost after NITI Aayog CEO BVR Subrahmanyam confirmed that India has officially overtaken Japan to become the fourth-largest economy globally, with a GDP of $4 trillion. This structural economic milestone is being interpreted as a testament to India’s continued growth momentum and resilience amid global headwinds. Subrahmanyam highlighted the strength of India’s macro fundamentals and a supportive global environment for further expansion.
Equity strategists pointed to the psychological impact of the news, especially ahead of upcoming economic policy reviews and global investor roadshows.
Highlights:
India’s GDP hits $4 trillion, surpasses Japan as world’s fourth-largest economy.
Strong macro indicators reinforce investor conviction in long-term India growth story.
Economic milestone timed with rising global investor attention.
RBI’s ₹2.69 Lakh Crore Dividend Strengthens Fiscal Stability
On Friday, the Reserve Bank of India announced a record dividend payout of ₹2.69 lakh crore to the central government for FY25, exceeding budget estimates by 27.4%. The larger-than-expected transfer is expected to significantly bolster the government’s fiscal position, helping it meet its FY26 fiscal deficit target of 4.4%. Analysts noted that the fiscal headroom could also help fund additional capital expenditure, support rural schemes, and strengthen market confidence.
Geojit Financial Services’ Chief Investment Strategist VK Vijayakumar emphasized that the surplus would reinforce the case for rate cuts and contribute to sustaining India’s low inflation trajectory.
Highlights:
Record RBI dividend adds fiscal cushion amid geopolitical and defence spending pressures.
Exceeds FY25 budget projections, aiding government’s fiscal consolidation goals.
Potential to free up additional capital for infrastructure and rural support.
Asian Market Rally and FII Inflows Enhance Risk Appetite
Indian equities also drew strength from supportive cues across Asian markets. Japan’s Nikkei 225 and South Korea’s Kospi traded in positive territory on Monday, helping improve regional risk appetite despite subdued performance in Shanghai and Hong Kong. With US and UK markets closed for holidays, Indian equities emerged as a key focus for global investors.
Exchange data also confirmed continued foreign institutional investor (FII) interest, with net equity purchases of ₹1,794.59 crore on Friday. Analysts highlighted the sustained inflow as a key technical and fundamental support for benchmark indices.
Highlights:
Asian peers post gains; Nikkei and Kospi in green despite mixed China data.
FIIs remain net buyers; ₹1,794.59 crore in Indian equities on Friday.
Global liquidity continues to chase India’s stable macro and earnings outlook.
Early Monsoon Sparks Hopes for Rural Recovery
The southwest monsoon’s arrival in Kerala eight days ahead of schedule—the earliest in 16 years—has injected further optimism into the market. Given the monsoon’s critical role in supporting India’s agrarian economy, the early onset has raised expectations of a strong kharif crop, improved rural incomes, and enhanced consumption demand across semi-urban and rural areas.
The agriculture sector’s positive outlook is particularly important for segments like FMCG, tractors, rural-focused NBFCs, and two-wheeler manufacturers, many of which saw early gains on Monday.
Highlights:
Southwest monsoon arrives in Kerala early, raising kharif crop prospects.
Improved rainfall to boost rural demand and agricultural production.
Stocks with rural exposure gain on expectations of consumption revival.
Rate Cut Expectations Build Ahead of June MPC Meeting
Investor optimism is further buoyed by growing expectations of another interest rate cut in the upcoming RBI Monetary Policy Committee (MPC) meeting scheduled for June 6. A Moneycontrol poll of economists and treasury officials revealed a consensus anticipating a 25-basis-point cut in the repo rate, which would mark the third straight reduction following February and April’s easing cycles.
With inflation easing and government borrowing costs falling due to RBI’s large dividend, market participants expect the central bank to continue supporting growth through a moderately accommodative stance.
Highlights:
Economists expect 25 bps rate cut in June MPC meeting.
Third consecutive rate cut anticipated amid softening inflation data.
Dovish monetary outlook seen as a key driver for equity valuation support.
