Nifty 50 Poised for Upside: Bulls Eye 25,200–25,500 Amid FII Selling and Rising Volatility
The Nifty 50 index extended its upward trajectory, closing at 25,001, a gain of 148 points or 0.60% from the previous session’s close of 24,853. The index formed a bullish candlestick with an upper shadow, signaling continued buying interest but with some selling pressure at higher levels. This performance was underpinned by positive global cues, including U.S. President Donald Trump’s decision to delay 50% tariffs on the European Union until July 9, 2025, and a decline in the Dollar Index, which bolstered market sentiment. The Bank Nifty also advanced, climbing 174 points to 55,562, though it displayed indecision with a Doji-like candlestick pattern, hinting at potential consolidation unless it breaches the critical 55,700 level.
Technical Analysis and Market Insights
The Nifty 50 showcased resilience, forming a higher high–higher low pattern with increased trading volumes compared to May 23, 2025. The index tested a long-term downward-sloping trendline at 25,070 but failed to sustain above it, indicating resistance. Experts suggest that a decisive close above the 25,000–25,050 zone could propel the index toward 25,200–25,300, with 25,500 as the next key level to watch. On the downside, immediate support lies at 24,900–24,850, with the 21-day Exponential Moving Average (21-DEMA) at 24,530 acting as a critical floor. A buy-on-dips strategy remains favorable as long as the index holds above this level.It is emphasized that a sustainable move above 25,000 could drive the Nifty towards 25,200–25,250 in the short term. 21-DEMA as a key support for maintaining bullish momentum is important.The Bank Nifty, closing at 55,562, showed strength but faces a pivotal resistance at 55,700.A sustained breakout above 55,700 could trigger a rally toward the all-time high of 56,098.6, supported by bullish momentum indicators . However, the index’s Doji pattern suggests indecision, and traders should monitor for a clear breakout or reversal.
Options Data
Insights
weekly options data underscores the significance of the 25,000 level for the Nifty 50. The highest Call open interest is concentrated at the 25,000 strike, followed by 25,500 and 25,800, with maximum Call writing at 25,000, 25,100, and 25,600. On the Put side, the 24,500 strike holds the highest open interest, followed by 25,000 and 24,200, with maximum Put writing at 25,000, 25,050, and 24,950. This data suggests that 25,000 is a critical pivot, with strong support at 24,500 and resistance at 25,500. A breakout above 25,000 could trigger short covering, amplifying upside momentum.
Institutional Activity:
FII and DII Flows
Foreign Institutional Investors (FIIs) continued their selling spree on May 26, 2025, offloading equities worth ₹51,312 crore in the cash segment, contributing to a cumulative net outflow of ₹46,369 crore. In contrast, Domestic Institutional Investors (DIIs) were net sellers at ₹13,049 crore, reflecting cautious domestic sentiment. In the derivatives segment, FIIs recorded a net outflow of ₹90 crore in index futures, while proprietary (Pro) traders saw a net inflow of ₹109,952 crore, with a cumulative figure of ₹109,862 crore. These flows indicate persistent FII selling pressure, potentially capping upside moves, though domestic and proprietary buying has provided some counterbalance.
Volatility and Market Sentiment
The India VIX, a measure of market volatility, rose 4.3% to 18.02, climbing above key moving averages and signaling heightened uncertainty. This uptick suggests traders should remain cautious, as increased volatility could lead to sharper intraday swings. Despite this, the broader market sentiment remains cautiously optimistic, driven by global developments and robust domestic earnings.
Nifty 50 and Bank Nifty Outlook
Nifty 50: The index’s close at 25,001 positions it at a critical juncture. A sustained move above 25,050 could target 25,200–25,300, with 25,500 as the next resistance. Support lies at 24,900–24,850, with a deeper base at 24,530. The bullish candlestick and higher volumes favor a positive bias, but traders should watch for confirmation above 25,070 to avoid false breakouts.
Bank Nifty:
At 55,562, the index is testing resistance at 55,700. A breakout could drive it toward its all-time high of 56,098.6, while failure to sustain above this level may lead to consolidation or a pullback toward 55,200. The banking sector’s strength, supported by strong Q4 earnings and expectations of global rate cuts, underpins its bullish potential.
Key Takeaways and Trading Strategy
The Nifty 50’s upward momentum, supported by global cues and technical strength, positions it for potential gains toward 25,200–25,500, provided it sustains above 25,050. However, persistent FII selling and rising volatility warrant caution. Traders should adopt a buy-on-dips approach near 24,900–24,850, with a stop-loss below 24,530.
For Bank Nifty, a breakout above 55,700 could signal a strong rally, but traders should monitor for confirmation to avoid whipsaws. Options data suggests hedging strategies around the 25,000 strike for Nifty, with a focus on 24,500 Puts for downside protection and 25,500 Calls for upside potential.
Conclusion
The Nifty 50 and Bank Nifty are at pivotal levels, with bullish setups tempered by FII outflows and rising volatility. Traders should stay agile, leveraging technical levels and options data to navigate potential breakouts or pullbacks. Monitoring global developments, such as U.S. monetary policy and trade dynamics, will be crucial for anticipating market direction in the coming sessions.
Anish J Parashar
Indirect tax india research
Disclaimer:Content above reflect personal views of the author and for trading and investment decisions consult with your financial advisor.
.jpeg)