Weekly Trend Report
- 26th May 2025
Week Gone By
Indian equity benchmarks registered notable losses this week, pressured by rising market volatility. The indices closed in the red on three out of five trading days. This downturn was largely driven by intensifying global trade tensions, concerns over fiscal deficits, rising bond yields, and renewed fiscal worries in major global economies. Investor sentiment also weakened due to growing unease about the U.S. fiscal outlook, especially after Moody’s downgraded the U.S. credit rating outlook. Despite several encouraging domestic economic indicators, investors remained focused on global risks and reacted sharply to international headwinds. India’s infrastructure growth slowed in April, rural inflation eased, and private sector activity accelerated sharply, driven by strong manufacturing and services PMI data.
Week Ahead
The Indian stock market is expected to begin the week on a cautious note as investors await key developments and continue to grapple with uncertainties, especially around the India-U.S. trade agreement. Elevated valuations and recent profit-booking have led to volatility, with potential for short-term consolidation. Foreign Institutional Investors may also trim their exposure in this environment. Despite these concerns, strong domestic fundamentals—such as healthy macroeconomic indicators, healthy corporate earnings, and forecasts of an above-normal monsoon—are helping to support market sentiment. Additionally, expectations of a record-high dividend payout from the RBI for FY25, to be discussed at its May 23 meeting, are seen as a positive move toward fiscal consolidation and have already contributed to easing bond yields.
Technical Overview
- Nifty closed at 24,853, registering a sharp recovery of +243 points (+0.99%). The bullish engulfing candle suggests strong demand at lower levels after recent weakness.
- The index bounced from the 24,500–24,600 zone, which has now turned into a solid short-term support cluster. This zone also aligns with the rising 20-day EMA and horizontal demand line.
- The Ichimoku cloud remains bullish, and price is again holding firmly above the cloud, indicating that the medium-term trend remains positive.
- RSI rebounded to 59.33, reversing from the midline and negating short-term bearish divergence. This bounce reflects regained momentum.
- The ADX remains firm at ~29.6, and the +DI continues to stay above -DI. The trend remains intact, although it’s entering a mature phase with moderate strength.
- MACD histogram bars have turned green again, confirming that the bearish momentum has waned and buyers are stepping back in.
- Volume was moderately higher on today’s upmove, which strengthens the reliability of the bounce and suggests fresh long interest.
- Price remains well above the rising 200-day EMA and short-term swing supports, indicating a healthy broader structure and no signs of breakdown.
- A clear bullish structure of higher highs and higher lows remains valid, with the recent correction appearing to be a pullback rather than trend reversal.
- No major distribution signs yet — the moving average slope, ADX strength, and clean trend continuation patterns remain bullish.
- Nifty ended the week on a firm note with bulls defending the 24,500 level, marking it as a key support zone. For the week ahead, it’s crucial for the index to hold above 24,000 to maintain momentum. On the upside, resistance is seen around the 24,900–25,000 range, while support remains firm at 24,600–24,500.
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