After a day of mild correction, Indian stock markets appear set for a strong opening on Tuesday, May 20, amid improving global sentiment and a positive trend in the GIFT Nifty.
The benchmark Nifty 50 had ended the previous session 74 points lower at 24,945, while the Sensex declined 270 points to close at 82,059. However, signals from global peers, derivatives data, and technical indicators suggest a possible shift in momentum.
As of early trade indications, the GIFT Nifty was trading at 25,074.5—up by 83 points or 0.33%—indicating a likely gap-up opening for the Indian indices.
Market Recap: May 19 Performance Shows Consolidation Post-Rally
The Indian market witnessed consolidation on Monday after a recent rally. The Nifty 50 moved within a narrow 154-point range, reflecting indecision among investors.
“After a sharp upside rally, the benchmark index Nifty has entered a consolidation phase over the past two trading sessions. It has been oscillating within a narrow range, forming small-bodied candles that reflect indecision and a temporary pause in momentum,” said Sudeep Shah, Deputy VP and Head of Technical & Derivatives Research at SBI Securities.
Despite the Nifty and Sensex closing in the red, market breadth remained positive on the BSE, where 2,524 stocks advanced, 1,571 declined, and 178 remained unchanged.
Key Levels to Watch Today
Shah believes the Nifty is at a crucial inflexion point.
Resistance: “The zone of 25,070–25,100 will act as a crucial hurdle for the index. Any sustainable move above 25,100 could trigger a sharp rally up to 25,230, followed by 25,380,” he said.
Support: On the downside, the index has immediate support between 24,850–24,880, and any fall below this could take it down to 24,700.
The Sensex, meanwhile, faces resistance at 82,400–82,500, while immediate support lies in the 81,600–81,700 zone.
Derivatives Data Signal Long Unwinding, Market Pause
On the derivatives front, the Nifty May futures contract dipped 0.41%, while combined open interest (OI) for the current, next, and far series declined 0.37%, signaling a phase of long unwinding.
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“The Open Interest (OI) Put-Call Ratio is currently at 0.70, indicating a slightly bearish undertone. The 25,000 and 25,100 strikes have the highest call OI, while the 24,900 and 24,800 put strikes are witnessing substantial OI build-up,” said Shah.
For the Sensex, the 82,500 and 83,000 strikes are seeing heavy call interest, with 82,000 and 81,500 strikes on the put side also showing activity.
Volatility on the Rise but Within Range
India VIX, the market’s volatility gauge, rebounded smartly on Monday after taking support near its 100-day EMA. It closed at 17.35, up by 4.86%.
“Going ahead, the zone of 18–18.20 will act as an immediate hurdle for the VIX. On the downside, 15.50–15.80 will serve as crucial support,” added Shah.
Global Cues Strong: Wall Street, Asia in the Green
Overnight gains on Wall Street added to the optimism. All three major U.S. indices staged a recovery to close higher despite initial selling pressure:
Dow Jones rose 0.32% to 42,792.07, aided by a strong rebound in UnitedHealth, which gained 8%.
S&P 500 closed up 0.09% at 5,963.60—marking its sixth straight gain.
Nasdaq Composite inched up 0.02% to 19,215.46.
Shah note that the S&P 500 is trading above both its short and long-term moving averages, and could test 6,020 in the short term. The immediate support zone lies at 5,870–5,890.
Asian markets mirrored the positive mood. The Nikkei 225 gained 0.81%, Kospi climbed 0.63%, and Hang Seng rose 0.84%. In China, the CSI 300 was up 0.31%, after the People’s Bank of China cut its 1-year loan prime rate from 3.1% to 3.0%, and the 5-year rate from 3.6% to 3.5%, in a bid to spur economic activity amid rising trade tensions.
FII/DII Activity: Continued Caution
Institutional activity showed continued selling:
FIIs net sold Rs 525.95 crore in the cash market.
DIIs also net sold Rs 237.93 crore.
“FIIs’ long-short ratio for index futures is at 42.32. On a net basis, they sold 263 index futures. In stock futures, FIIs sold 58,668 contracts. On the options front, they sold 7,926 call contracts and bought 11,900 put contracts,” said Shah.
Sectoral Outlook: Rotational Leadership Emerges
Despite the broader indecision, select sectors are expected to outperform.
“Technically, Nifty Auto, Capital Goods, Metal, PSU Banks, and Realty sectors are likely to lead the next leg of the upmove in the short term,” Shah highlighted.
The rotation out of IT stocks, such as Infosys, TCS, Tech Mahindra, and HCL Tech—among Monday’s top losers—may offer opportunities in cyclicals and defensives.
Bulls Eye 25,100 for Breakout
The stock market today is at a critical juncture, with technical resistance at 25,100 on the Nifty likely to dictate near-term momentum. Global cues are strong, volatility is within a manageable range, and sector rotation into broader themes like autos, capital markets, and PSU banks suggests potential leadership going forward.
However, caution persists from institutional investors, especially FIIs. Traders and investors should closely monitor the 25,100 breakout level on the Nifty and 82,500 on the Sensex for directional clarity.
Disclaimer
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