In a powerful rebound from the previous session’s sharp losses, Indian benchmark indices staged an impressive rally on Friday, May 23, shrugging off concerns from the global bond rout and rising U.S. fiscal deficit. The Sensex jumped 600 points, while the Nifty 50 reclaimed the 24,800 mark, boosted by strong performances in IT, FMCG, and financial stocks.
At 10:06 AM, the Sensex soared 597 points or 0.74% to 81,549.05, while the Nifty 50 climbed 194 points or 0.79% to 24,804.20. The advance-decline ratio was also positive with 1,916 shares advancing, 1,059 declining, and 166 remaining unchanged, reflecting broad-based buying across sectors.
Markets Recover Despite Global Headwinds
The strong opening came after a rough previous session driven by global volatility. However, a slight cool-off in global bond yields helped calm investor nerves. Markets brushed aside fears surrounding the U.S. fiscal deficit and the aggressive sell-off in global bond markets, helping bulls regain some lost ground.
The India VIX, a key gauge of market volatility, also eased by 150 basis points to hover near the 17 mark, indicating reduced fear among traders.
Sectoral Highlights: IT and FMCG Outperform
On the sectoral front, IT stocks led the gains, buoyed by a bullish report from Bernstein, which triggered fresh buying in frontline technology counters. FMCG stocks also rallied, with ITC shining on the back of its strong Q4 results.
In contrast, pharma and healthcare stocks came under pressure, with the Nifty Pharma index declining up to 1.5%.
The broader markets underperformed slightly, with the Nifty Midcap 100 dipping 0.2% and Smallcap indices sliding 40 basis points.
Global Market Snapshot
Overnight, Wall Street showed caution as all three major indices ended mostly flat. The Dow Jones fell by just 1.35 points, the S&P 500 slipped 0.04%, while the Nasdaq gained 0.28%. Investors remained wary amid rising Treasury yields, as the U.S. House passed a controversial tax and spending bill.
Meanwhile, Asian markets opened strong, signalling that the earlier panic over U.S. fiscal concerns may be easing. The Nikkei 225 rose nearly 1%, and Hang Seng gained 0.4%, showing a positive risk-on sentiment across the region.
Institutional Activity: FIIs Turn Net Sellers Again
On the institutional front, foreign investors sold equities worth ₹5,045 crore on May 22, following a net buy of ₹2,200 crore the previous day. In contrast, domestic institutional investors (DIIs) stepped in as buyers, with net purchases of ₹3,715 crore, offering some support to the rally.
“The sustained FII buying which drove the recent rally seems to have paused. If global trends worsen again, FIIs may continue offloading,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Technical Outlook: Resistance at 24,850, Caution Below 24,450
Kotak Securities noted that while the market texture remains weak intraday, a fresh selloff may only occur if Nifty breaches the 24,450 level or falls below its 20-day Simple Moving Average (SMA). For the short term, the 24,650–24,750 range will act as key resistance, and a decisive move above 24,850 could extend the rally.
On the flip side, a fall below 24,450 may trigger a decline towards 24,165, making it crucial for traders to watch these levels closely.
Options Outlook: Bearish Undertone Persists
Despite the day’s bounce, bearish sentiment lingers in the derivatives space. According to Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities, FPIs are continuing to build short positions.
“Until Nifty convincingly reclaims 24,800, this zone acts as a near-term ceiling. Any minor rally could turn into a bear trap, drawing in fresh shorts,” Dhameja warned.
Strong Domestic Sectors Show Resilience
Interestingly, even when the broader market looks shaky, domestic demand-driven sectors like financials, telecom, and aviation remain resilient. This is reflected in the performance of ICICI Bank, Bharti Airtel, and InterGlobe Aviation, whose stocks continue to show strength.
This message from the market is important, noted Vijayakumar, highlighting how strong macro fundamentals like robust growth, declining inflation, and lower interest rates are still favoring India’s long-term story.
Final Thoughts
The market’s rebound from bond-market-led jitters is a sign of resilience, but the outlook remains mixed in the near term. Investors should remain cautious around key technical levels and monitor institutional flows and global developments closely.
Stay updated, trade smart, and keep an eye on resistance zones as we head into the next trading week.
