Sell on Rise, But Don’t Lose Sight 👀

Indian equity markets had a bumpy ride last week, swayed by a mix of domestic and global cues. Rising bond yields across the globe, a sudden U-turn in FII flows, and renewed geopolitical tensions in the Middle East all played their part in unsettling investor sentiment.

Despite Friday’s rebound, the Nifty 50 wrapped up the week in the red, closing 0.67% lower at 24,853. The Midcap 100 wasn’t spared either, slipping 0.39%.

The volatility was largely fuelled by global uncertainties — from rising US bond yields (thanks to growing concerns around US debt) to currency swings and some noise around US-India trade dynamics.

Market Performance

Here's how the major indices fared:

Index	May 16, 2025	May 23, 2025	% Change
Nifty	25,109.8	24,853.2	-0.67
Bank Nifty	55,354.9	55,398.6	0.08
Midcap Nifty	57,060.5	56,687.8	-0.65

Sector Performance

Among sectors, Realty and Defence stood out as the week’s winners. The Nifty Realty index jumped 2.66%, bouncing back sharply after a volatile start to the week.

Defence stocks followed suit, with the Nifty Defence index gaining 1.74%, while Metals managed a modest 0.52% uptick.

Banks held their ground with the Nifty Bank inching up 0.08%, and the broader Bank index adding 0.04%.

However, the pain was visible in other pockets — Autos skidded 1.83%, IT fell 1.50%, FMCG declined 0.98%, and Pharma slipped 0.92%, reflecting sectoral rotation and cautious sentiment.

Indices	Weekly Change (%)
Nifty Realty	2.66
Nifty PSU Bank	1.12
Nifty Metal	0.52
Nifty Media	0.10
Nifty Bank	0.08
Nifty Financial Services	0.04
Nifty Energy	-0.08
Nifty Pharma	-0.92
Nifty FMCG	-0.98
Nifty IT	-1.50
Nifty Select Midcap	-1.71
Nifty Auto	-1.83

Weekly Top Gainers (Nifty 500)

Company	Weekly Gain (%)
TTML	26.6
Honasa Consumer	25.8
Emcure Pharma	20.7
Pfizer	16.7
Reliance Power	15.2

Weekly Top Losers (Nifty 500)

Company	Weekly Loss (%)
Doms Industries	-10.6
Dixon Technologies	-9.9
Sagility India	-9.3
Sterling & Wilson	-7.9
Colgate Palmolive	-7.8

TTML surged after reports suggested a potential capital infusion from Tata Sons into its struggling parent company to help settle AGR dues. Honasa Consumer and Emcure Pharma rallied on strong 4QFY25 results.

On the flip side, Doms, Dixon, and Sagility slid after their quarterly results, with some stocks facing disappointment and others seeing profit booking.

Liquidity Conditions

FIIs have shown strength across most key emerging markets in May 2025, barring Thailand.

India attracted robust inflows of US$ 2,253 million, while Taiwan led the pack with US$ 8,117 million. Other markets such as Brazil (US$ 1,742 million), South Korea (US$ 722 million), Malaysia (US$ 486 million), and Indonesia (US$ 210 million) also witnessed net inflows.

That said, the overall outlook remains cautious. Moody’s downgrade of the US credit outlook, resurfacing fiscal concerns in major economies, and mixed signals from China have added to market uncertainty — and FPI flows may remain choppy in the near term.

India Equity - Institutional Funds Flow (in Rs. crore)

Date	FII	DII
May 19, 2025	-526	-238
May 20, 2025	-10,016	6,738
May 21, 2025	2,202	684
May 22, 2025	-5,045	3,715
May 23, 2025	1,795	300
Total	-11,590	11,199

Global Caution Amid Rupee Rally

The Indian rupee posted its sharpest single-day gain since November 2022, buoyed by a softer U.S. dollar and robust domestic equity markets.

Meanwhile, gold prices surged 4.6%, driven by dollar weakness and growing U.S. fiscal concerns. Geopolitical tensions in the Middle East and Eastern Europe added volatility, keeping global investors cautious.

U.S. stock indices slipped with the S&P 500 down 1.23%, while European markets outperformed modestly. Asian markets showed mixed results, with gains in Hong Kong and Shanghai offset by losses in South Korea.

Treasury yields climbed, with the 30-year bond yield hitting its highest level since October 2023, reflecting investor unease amid fiscal uncertainties.

In economic highlights, UK retail sales surpassed expectations, and Japan recorded its highest core inflation in over two years. Brent crude held steady near US$ 63.4 per barrel, while India's 10-year government bond yield closed at 6.25%, and the rupee ended slightly weaker at 85.22 against the dollar.

Overall, global markets remain watchful amid mixed signals and mounting fiscal challenges.

Technical Perspective

Technically, the market has formed a bullish reversal on daily charts and is trading above the 20-day SMA — a positive short-term signal.

Key support zones are seen at 24,600 / 80,900 and 24,450 / 80,500. On the upside, 25,000 / 82,300 is the immediate resistance. A breakout above this could push the index towards 25,150–25,500 / 82,700–83,600.

However, a fall below 24,450 / 80,500 could drag it down to 24,380 / 80,300, and further to 24,165 / 79,700 if weakness continues.

Bank Nifty remains in an uptrend above 54,575. Resistance is placed at 55,700–56,100–56,500. A breach below 54,575 may weaken momentum.

Sell on Rise, But Don’t Lose Sight

We had anticipated a continued uptrend in Indian equities, but the benchmark indices have remained largely flat, with emerging signs of weakness. The current market setup appears to be a classic sell-on-rise scenario, where every upward move is met with selling pressure.

In contrast, the broader markets — particularly mid-cap and small-cap indices — are showing resilience. We won’t be surprised if they continue to outperform the benchmarks in the coming week, supported by strong stock-specific action and rotational flows.

While the short-term outlook leans cautious, our long-term view on Indian equities remains constructive. The government’s focus on public capital expenditure remains a strong tailwind. Additionally, the Reserve Bank of India’s record dividend transfer of Rs. 2.69 lakh crore to the Central Government for FY25 reinforces confidence in fiscal management.

This amount, significantly higher than the Rs. 2.1 lakh crore transferred in FY24 also exceeds budget estimates of Rs. 2.57 lakh crore. Such fiscal support improves the government’s ability to balance capex priorities and fiscal prudence, which bodes well for long-term macro stability.

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