INDIA STOCKS-Indian shares advance on EU tariff relief, central bank's record dividend

By Bharath Rajeswaran

May 26 (Reuters) - Indian shares advanced on Monday, extending gains from the previous session, on easing global trade tensions and the Reserve Bank of India's record dividend transfer, which reaffirmed prospects of sustained fiscal consolidation.

The Nifty 50 .NSEI closed 0.6% higher at 25,001.15, while the BSE Sensex .BSESN traded 0.56% higher to close at 82,176.45.

U.S. President Donald Trump backed off his threat to impose 50% tariffs on European Union (EU) imports, easing trade concerns, potentially hinting "that the U.S. may reduce its aggression in the trade war, which is a positive," according to G Chokkalingam, founder and head of research at Equinomics Research and Advisory.

The U.S. and EU now have time until July 9 to work on a trade deal.

All 13 major sectors logged gains.

Metals .NIFTYMET jumped about 1%, as a weaker U.S. dollar and Trump's reprieve boosted the appeal of commodities. MET/L

Auto .NIFTYAUTO, pharma .NIFTYENR, IT .NIFTYIT all gained about 1%, while financials .NIFTYFIN, the heaviest-weighted sub-index, added 0.4%.

Midcaps .NIFMDCP100 and smallcaps .NIFSMCP100 rose 0.7% and 0.4%, respectively.

The RBI's board approval to transfer a record 2.69 trillion rupees ($31.6 billion) as surplus to the federal government for the fiscal year ended March could help the government reduce its fiscal deficit drastically, said Chokkalingam.

Analysts said domestic fundamentals — including projected GDP growth of more than 6% in fiscal 2026, an early onset of the southwest monsoon and moderating inflation — remain supportive, despite global uncertainty.

Among individual stocks, JSW Steel JSTL.NS rose 2.4% after the Supreme Court of India paused the liquidation proceedings of Bhushan Power and Steel (BPSL), weeks after it rejected JSW Steel's deal to acquire the debt-ridden firm and ordered its liquidation.

Bajaj Auto BAJA.NS also gained 2.4%. The two-wheeler maker entered a call option deal with Austria's Pierer Group to take a controlling stake in the troubled motorcycle maker KTM.