Indices ease after surge; FIIs, trade hopes cushion fall

Markets opened with gains Friday morning, extending yesterday’s rally as positive sentiments were fueled by robust foreign institutional buying, expectations of a US-India trade deal, and falling US bond yields that raised hopes for interest rate cuts.

The Sensex declined 162.71 points or 0.20 per cent to 82,368.03 after opening at 82,392.63, compared to the previous close of 82,530.74. The Nifty slipped 33.20 points or 0.13 per cent to 25,028.90, down from the previous close of 25,062.10, both trading marginally lower in early trade after yesterday’s surge that saw the indices gain approximately 1.5 per cent. The market sustained above the psychologically important 25,000 level for Nifty, signaling continued bullish momentum.

“The market’s outlook remains positive, but buying on intraday corrections and selling on rallies would be the ideal strategy for day traders,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities. “On the downside, 24,900/82200 and 24,750/81800 would act as key support zones, while 25,210–25,300/82800-83000 could serve as key resistance levels.”

Foreign Institutional Investors (FIIs) emerged as aggressive buyers, purchasing equities worth ₹5,393 crore on Thursday, marking the second consecutive day of net buying and pushing their May investments to nearly ₹15,000 crore – the highest monthly inflow in recent times.

“When aggressive market activity happens against the near consensus view, the market movement can be sharp. Yesterday’s 550-point spike in Nifty from the lows was a classic case of such unexpected contrarian trend,” noted Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.

The defensive sector led gains with a 2.62 per cent rally, while BEL emerged as the top gainer on NSE, rising 2.08 per cent to ₹357.70. Other top performers included Eternal (1.31 per cent), Eicher Motors (1.28 per cent), NTPC (1.18 per cent) and Adani Enterprises (0.98 per cent). Conversely, Bharti Airtel led the losers, dropping 2.68 per cent to ₹1,817.20, followed by IndusInd Bank (-1.99 per cent), HCL Technologies (-0.94 per cent), Infosys (-0.88 per cent) and Tech Mahindra (-0.82 per cent).

Market sentiment was also boosted by optimism surrounding a potential US-India trade deal after US President Donald Trump stated that India is offering a zero-tariff trade agreement. However, this comes amid contradictory signals as Trump reportedly urged Apple CEO Tim Cook not to expand manufacturing in India.

In global markets, US indices showed mixed performance Thursday with the Dow Jones advancing 0.6 per cent while the Nasdaq Composite ended marginally lower. US economic data released Thursday showed producer prices unexpectedly declining by the most in five years, suggesting companies are absorbing some impact from higher tariffs.

“US stocks closed mixed on Thursday, with gains in Cisco Systems following an upbeat forecast, while UnitedHealth tumbled after a report of a criminal investigation into the insurer,” said Devarsh Vakil, Head of Prime Research at HDFC Securities.

Oil prices continued their downward trend, dropping more than 2 per cent Thursday on reports of a potential US-Iran nuclear deal, which could lift sanctions and introduce additional crude supply. Brent crude was trading near $64 per barrel, representing a significant 4 per cent decline.

“Crude oil extended its fall in a highly volatile session amid possibility of US-Iran nuclear deal and higher US crude oil stocks,” explained Rahul Kalantri, VP Commodities at Mehta Equities Ltd. “The Iranian supreme leader said that they are agreeing to sign a nuclear deal with the US if all economic sanctions are lifted.”

Gold prices showed resilience despite recent volatility, with the precious metal edging higher to trade near $3,245 an ounce. “Gold tested the key support level of $3,140 per ounce but rebounded strongly to erase earlier losses and closed on a positive note,” Kalantri added.

Asian markets, meanwhile, trended lower with Japan’s index dropping 0.5 per cent after data showed its economy contracted for the first time in a year, shrinking by 0.7 per cent in the first quarter on an annualised basis.

Analysts maintain a cautiously optimistic outlook for Indian markets, with most recommending a selective buying approach. “Traders are advised to adopt a ‘buy on dips’ strategy with strict risk management and avoid taking large overnight positions due to ongoing global uncertainties,” suggested Hardik Matalia, Derivative Analyst at Choice Broking.

Technical indicators for Nifty suggest immediate support at 24,850–24,700 levels, while resistance is seen at 25,100 and 25,235. For Bank Nifty, which surged 554 points yesterday, support is placed at 55,000 and 54,720, with resistance at 55,700 and 56,000.

Market participants are also closely watching ongoing quarterly results, with BHEL, Emami, Jubliant Pharmova and NESCO scheduled to announce their numbers today, potentially influencing sector-specific movements in the session ahead.

Published on May 16, 2025