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Where's the stock market headed in bull vs bear battle? An investor guide
As Indian equities whipsaw and struggle to find direction after recovering from recent lows, analysts reckon this consolidation is likely to continue amid opportunities in select pockets. The main focus for investors in this backdrop should be on asset allocation, analysts suggest, with safe-haven assets continuing to shine.
The de-escalation of geopolitical tensions with Pakistan and signs of global trade returning to normalcy after the US-China trade deal boosted the risk-on sentiments in the last few trading sessions.
Since the lows of April 7, the 30-stock Sensex and Nifty have moved up 15 per cent till May 15. In the last couple of sessions, however, exhaustion has crept in as the frontline indices have not moved much.
With the fourth quarter results season largely behind, earnings have been lacklustre apart from a select few, analysts say. Valuations have moderated but are on the rise amid recovery, while a revival in foreign inflows is seen.
What's on the bull's radar?
While the current volatility is set to remain for the short term, market experts now focus on the strength of India's improving macroeconomic indicators for the next leg of the rally.
Markets are now turning their attention to macroeconomic indicators, and the current setup looks broadly supportive, according to Vaibhav Porwal, co-founder of Dezerv, a Mumbai-based wealth management company. Global funds have mopped up stocks worth over ₹31,200 crore in two months, inflation has cooled to a six-year low, the Rupee's gains from a weak dollar, strong tax collections and softer global oil prices are some of the signs, he said.
The decline in consumer prices has paved the way for further rate cuts by the Reserve Bank of India's Monetary Policy Committee (MPC), analysts said. "Going forward, we expect markets to take cues from the strength of these macro factors," Porwal noted.
The bear's side
Bears, in the days ahead, will likely pin their hopes on global geo-political tensions and broader market valuations after the recent market spurt, according to analysts.
US President Donald Trump's see-saw on tariff policies is likely to keep traders and investors on the edge. While the conflict with Pakistan has subsided, reports show that Israel is preparing for a potential strike on Iranian nuclear facilities, weighing on crude oil prices.
The broader market still prices in a lot of optimism, Porwal said. "We remain cautious on the mid- and small-cap space from a valuation standpoint. While select businesses in these segments continue to deliver robust growth, the broader basket is pricing in a lot of optimism."
Investors playbook
Investors, analysts suggest, should consider locking in yields through 2 to 3-year maturity bonds, Porwal said, as fixed income is offering attractive real returns. One should consider allocating 8-10 per cent of their portfolios to gold, and he maintains a large-cap bias on equities.
Markets will continue to see mixed activity and investors should consider seeking investment opportunities during dips, says Chouhan. If the market reaches the support level, investors should invest in large banks or non-banking financial companies (NBFCs), capital market-related stocks, to capitalise on the opportunity in the market, he said.
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The BSE Sensex also managed modest gains, rising 123.42 points or 0.15%, to finish at 82,515.14. On the other hand, the Nifty Bank came under pressure, declining 169.35 points or 0.30%, to settle at 56,459.75. Sector-wise, Pharma led the gainers with a rise of 0.50%, followed by Energy up 0.30%, and the Healthcare index that added 0.25%. On the losing side, the PSU Bank sector declined the most by 0.88%, while the FMCG index fell 0.67%, and the Banking index ended down 0.30%. Also Read: Behind ICICI Lombard's recent surge: What the headlines won't tell you In stock-specific action, HCL Tech led the gainers with a strong 3.23% rally, followed by Infosys, up 2.20%, and Tech Mahindra, gaining 1.65%. Among the top losers were Shriram Finance, which dropped 2.05%, Power Grid, falling 1.86%, and Adani Enterprises, down 1.22%. Nifty technical analysis daily and hourly Technically, the Nifty continues to trade above all its key moving averages. The 20-day Simple Moving Average (SMA) now stands at 24,856, while the 40-day Exponential Moving Average (EMA) is placed at 24,480. On the intraday timeframes, the index remains comfortably positioned, with the 20-hour SMA at 25,132 and the 40-hour EMA at 24,011. Importantly, the falling wedge breakout pattern identified earlier on the 45-minute chart has played out successfully, with the immediate target around 25,200 achieved. The index now awaits fresh cues for the next leg higher. Momentum indicators suggest a moderately bullish undertone. The daily RSI has ticked up slightly to 62, reflecting sustained strength, while the hourly RSI has eased to 57, indicating a brief consolidation in the short term. The MACD indicators remain positive, with the daily MACD at 202 and the hourly MACD at 64, showing continued bullish momentum with no signs of exhaustion yet. However, the derivatives data paints a more cautious picture. Total Call Open Interest (OI) now stands at 176.1 million, compared to 153.2 million in Puts, resulting in a bearish differential of -22.9 million. The trend remains negative on the OI front, as the Call OI change of 679,800 outweighs the Put OI change of 491,200, leading to a net bearish differential of -188,600. The highest Call OI continues to build at the 26,000 strike, with notable additions at the 25,250 strike. On the Put side, the maximum OI is still concentrated at the 25,000 strike, while the highest addition is now seen at 25,200—indicating that bulls are attempting to build fresh support closer to current market levels. The overall Put-Call Ratio remains subdued, reflecting a cautious bias among traders. Volatility remained in check, with the India VIX falling by another 2.48% to close at 13.66, its lowest reading in recent sessions. This sharp drop in volatility indicates growing investor confidence and reduced fear, often a precursor to stronger directional moves when paired with positive price action. In summary, the Nifty's steady close above the 25,100 mark, coupled with improving technical and global cues, suggests ongoing resilience. However, the large Doji candle and bearish bias in derivatives data call for a cautious approach in the immediate term. A decisive breakout above 25,250 could pave the way toward the 25,300–25,400 zone, while immediate support is seen at 25,000, followed by a broader base between 24,800 and 24,600. Traders should stay nimble and monitor global signals and institutional flows for fresh directional triggers. Ankush Bajaj is a Sebi-registered research analyst. His registration number is INH000010441. Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
