The derivatives market shows a shift toward bullish sentiment, as indicated by rising Put-Call Ratios and positions taken by option writers.
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The domestic equity market is expected to open on a firm note thanks to local cues. Gift Nifty at 25,183 against the Nifty futures price of 25,078 indicates a strong gain of over 100 points. Analysts expect the short-term momentum to continue but caution investors against profit-taking.
Swapnil Aggarwal, Director, VSRK Capital, said: The current market rally is driven by strong corporate earnings, global cues and foreign investor interest. Optimism about economic growth, especially in India, has lifted sentiment with robust GST collections and high-frequency indicators. Banking, infrastructure and FMCG have shown strength, while anticipation of stable interest rates and policy continuity before elections has added to the confidence. “Global markets are firm with hopes of a soft landing for major economies and that’s adding to the momentum,” he further said.
The derivatives setup has started tilting in favour of the bulls. “Put writers were busy building positions at higher strikes, which triggered some solid call unwinding—a typical sign of bearish retreat. Call writers were seen shifting upwards to distant strikes, confirming the pressure they’re feeling,” said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities. The OI clusters between 25,000–24,800 support this trend. The Put-Call Ratio (PCR) jumped sharply from 0.73 to 1.08, showing a noticeable shift in favour of bullish sentiment. Max Pain is currently stationed at 24,850, hinting that the market’s still waiting for a decisive cue for the next leg, he added.
India’s VIX dropped another 1.93%, ending at 16.89. “That’s a significant drop over the last four sessions. The cooling VIX points to reduced fear and a calming of nerves in the market. Lower volatility often accompanies trending phases, especially when bulls are gaining ground,” he said.
Meanwhile, Indian exporters started the fiscal on a buoyant note with outbound shipments in April 2025 rising 9.03 per cent (year on year) to $38.49 billion, led by engineering goods, petroleum products and electronics. However, the trade deficit increased to a five-month high of $26.42 billion as the import surge sharpened. Imports increased 19.12 per cent (year on year) to $64.91 billion in April due to a rise in crude oil and electronics shipments, per data shared by the Commerce Department on Thursday.
“The merchandise trade deficit in April 2025 exceeded our expectations despite a healthy growth in exports, partly on account of front-loading of crude oil imports amid softer prices, as well as a sharp increase in electronic goods,” said Aditi Nayar of Emkay Global Research, “With this, the absolute size of the current account deficit for Q1 FY2025 appears set to widen to US$14-16 billion.” The higher-than-anticipated trade gap reflects strategic crude oil purchases while prices remain favourable, along with strong demand for electronic imports. While exports maintained steady growth, these import factors drove the deficit expansion. Monitoring global commodity price trends and domestic demand patterns will be crucial in the coming months to assess India’s external sector stability, she added.
Meanwhile, global stocks are mixed. Australian stocks are up due to a rate cut, even though others in the region are down.
Published on May 16, 2025