Equity markets in India exhibited strong recovery trends on the 21st of May 2025 as both sets of indices oscillated before sharply settling at positive figures amid heavy volatility and three previous days of losses. The 410-point gain by Sensex brought its figure to 81,596.63, which was a 0.51% increase, while NSE Nifty50 also saw an increase to 24,813.45 after a 0.52% increase as it surged by 129.55 points. Notable was the fact that both indices hit intraday highs with their closing value figures being at Sensex 82,021 and Nifty 24,946.
There was almost complete participation from all the sectoral indices, with the Nifty Realty and Pharma indices leaping ahead with their increases of 1.72 and 1.25 percent, respectively. Important rises in auto and IT stocks were recorded too. Consumer durables were the only sector to register negative values. MidCap and SmallCap also witnessed a fair share of growth, earning a boost to 0.78% and 0.38%, respectively.
Top Gainers and Losers: Heavyweight Stocks in Focus
When it comes to the Sensex market, Bajaj Finserv, Tata Steel, Sun Pharma, Tech Mahindra, and Bajaj Finance were the top-gaining companies, with an increase of 2.02%. On the contrary, IndusInd Bank, Kotak Mahindra Bank, Power Grid Corporation, ITC, and Ultratech Cement were among the few whose stocks plummeted to a decrease of 1.87%.
Key Drivers: Short Covering and Economic Optimism
The strong recovery of the stock market was as a result of short covering post the drop of almost 2% in the previous 3 sessions. This led investors to purchase heavyweight stocks. Coupled with this, the weakening dollar index fueled foreign investment in Indian stocks. The cooling inflation, along with the increase in the domestic growth outlook, has overall improved the sentiment of investors. It is also noteworthy that the optimistic sentiments regarding the ongoing trade negotiations between the US and India provided support, while some analysts are skeptical of the market volatility that may ensue without clear outlooks.
Technical Analysis: A Bullish Sentiment Amid Resistance Levels
The concern for technical analysts remains with the Nifty grappling below 24,800, which is an encouraging close; however, the index runs into stiff resistance at around the 24,950 mark. There is still the potential for a dip to 24,700, which may set off a corrective move towards 24,428, whereas crossing above 25k is likely to revive bullish sentiments across the market. The positive advance-decline ratio of 2304 shares listed on the BSE emerging higher suggests regional headwinds have a negligible impact on global market uncertainty.
There is also slight optimism around the mid-cap and small-cap indices also having led the broader market performance.
The broader markets followed the shift in sentiment and mode of benchmark indices, focusing on flipping green, where the BSE Midcap and Smallcap indices also posted gains of 0.9% and 0.51%, respectively. Participating in this rally, the retail and institutional markets showcased their confidence as the market cap of BSE increased by almost ₹3 lakh crore overnight. Economic concerns still loom large, but the uptick in the volatility index still reflects the cautious mentality from a good portion of retail, institutional, and even retail investors.
The bounce back in the stock indices during Tuesday’s session was a necessity for a lot of investors crying for a ray of hope. The shift in the VIX to 17.55 points also portrays a general concern towards global economic sentiment, which is likely stifled by the closing earnings season domestically as well. US monetary policy and ongoing US-India trade relations remain a focus of the market in the next few sessions as the economic sentiment is likely to be tempered.
