Rollercoaster May: Nifty 50’s Tug-of-War with Resistance
The Nifty 50 index in May 2025 displayed a volatile yet range-bound performance, closing at 24,750.9 on May 5, 2025, with a modest 0.5% gain for the day.
Throughout the month, the index oscillated between 24,542 and 25,001, struggling to break past the critical resistance zone of 25,050–25,070. A bearish bias emerged on weekly charts, with consolidation candles signaling caution at higher levels, particularly near the 75% retracement zone of 25,100–25,300. The index’s inability to sustain above 25,000, coupled with a weak Advance Decline Ratio (0.7 on June 2), highlighted a bearish undercurrent despite selective strength in heavyweights like Adani Ports (+3.29%) and M&M (+1.75%). Investors remained cautious, awaiting fresh triggers like the Reserve Bank of India’s (RBI) monetary policy decision, which added to the market’s indecisiveness.
Key Insight:
The Nifty 50’s failure to breach 25,050 suggests a potential pullback unless bullish momentum builds above 24,900. Investors should monitor global cues and RBI’s rate decision for directional clarity.
2. Institutional Tug-of-War:
FIIs Sell, DIIs Support .
Foreign Institutional Investors (FIIs) were consistent net sellers in both futures and options markets throughout May 2025, with a cumulative net outflow of -68,669 in futures and -54,751 in options by May 5. Notably, FIIs sold heavily in futures (-106,988 on May 5) and options (-45,269 on May 5), reflecting bearish sentiment. In contrast, Domestic Institutional Investors (DIIs) provided crucial support, remaining net buyers in the cash market, with inflows of 5,907 on May 3 and 5,313 on May 2. This divergence highlights DIIs’ role in cushioning market declines, particularly as FIIs offloaded ₹2,589 crore on May 2. Posts on X noted that DIIs have been consistent buyers since April 2023, countering FII selling pressure, which shifted to net selling in April 2025.s
Key Insight:
DII buying is stabilizing the market, but sustained FII selling could pressure the index if global sentiment worsens. Watch for FII activity post-RBI policy for shifts in sentiment.
3. Sectoral Spotlight:
PSU Banks Shine, IT and Autos Lag.Sectoral performance in May 2025 was mixed, with PSU banks and realty indices showing resilience, while IT, autos, and metals weighed on the Nifty 50. The Nifty Bank index rose steadily, closing at 55,760 on May 5, supported by strong gains in PSU banks like PNB (+2.58%), Bank of Baroda (+2.25%), and Canara Bank (+2.00%). Conversely, the Nifty IT index led declines, with large caps like Infosys (-0.57%) and Tech Mahindra (-1.44%) dragging the broader index. Adani group stocks, notably Adani Ports (+3.29%), provided selective strength, but selling pressure in autos (Bajaj Auto -1.44%) and metals (JSW Steel -1.41%) offset gains. The Nifty Financial Services Index also dipped marginally (-0.19% on June 2), with HDFC Bank (-1.44%) and Kotak Bank (-0.52%) underperforming.
Key Insight: PSU banks and realty offer short-term opportunities, while caution is warranted in IT and autos due to persistent selling. Diversify exposure to balance sectoral volatility.
4. Technical Tightrope:
Nifty’s Battle with Key Levels
Technical analysis reveals the Nifty 50 trading within an ascending channel, facing resistance at 25,050–25,070 and support at 24,500–24,650. A breakout above 24,740 could push the index toward 24,900–24,950, while a drop below 24,650 may signal weakness toward 24,370. The India VIX dropped to a two-month low ahead of the RBI’s MPC meet, indicating reduced volatility but also investor caution. X posts highlighted bearish signals, with eight distribution days and high volumes signaling potential downside risks toward 23,900–24,200 if support breaks. However, a bullish breakout above 25,128 could trigger short covering, pushing the index toward 25,350–25,600.
Key Insight: Traders should adopt a buy-on-dip strategy near 24,500 for long-term gains, but set stop-losses below 24,650 to manage downside risks
5. Macro Movers:
GDP Strength Meets Global HeadwindsIndia’s Q4 FY25 GDP growth of 7.4% (beating estimates) and May GST collections of ₹2.01 lakh crore signaled economic resilience, boosting investor confidence. However, global headwinds, including U.S. tariff concerns and European political uncertainty, capped gains. The RBI’s anticipated repo rate cut, expected on June 6, 2025, added to market anticipation, with investors eyeing its impact on liquidity and banking stocks. The Indian rupee appreciated, supported by improved risk sentiment, but trade tensions and inflation concerns in the Eurozone weighed on global markets. X posts suggested caution due to high valuations and potential supply above 25,000, urging investors to avoid expiry trades.
Key Insight: Positive Domestic Macro Data supports long-term bullishness, but global uncertainties and RBI’s policy outcome will dictate near-term moves. Stay nimble and monitor global cues.
Recommendations for Investors
Short-Term Traders:
Consider buy-on-dip opportunities near 24,500–24,650, targeting 24,900–25,000, with strict stop-losses below 24,650. Avoid aggressive positions ahead of monthly expiries due to volatility.
Long-Term Investors:
Focus on quality stocks in PSU banks and realty, given their outperformance. Diversify into Nifty 50 ETFs or index funds for broad exposure to mitigate sectoral risks.
Risk Management:
Monitor FII flows and RBI’s rate decision closely, as they could trigger sharp moves. Maintain cash reserves to capitalize on dips below 24,500.
Anish J Parashar
Indirect tax india research
Disclaimer: Investing in securities carries risks. Conduct thorough research and consult a financial advisor before making investment decisions. Past performance is not indicative of future results.
Sources:National Stock Exchange (NSE) datasource:nseWeb sources:,,,,X posts:,,,
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