Market outlook for the week (26-May to 30-May, 2025)

26 May 2025 , 09:22 AM

SECTORAL STORY FOR THE WEEK TO MAY 23, 2025

The week to May 23, 2025 saw Nifty and Sensex losing -0.67% and -0.74% respectively. During the week, FPIs were net sellers in Indian equities worth $(560) Million; as caution became the watchword. Here are 20 key sectors for the week.

Sectoral Index	Weekly Returns	Index (23-May)	Index (16-May)
Nifty Realty	2.66%	936.85	912.55
Nifty India Defence	1.75%	8,454.95	8,309.15
Nifty Capital Markets	1.52%	4,116.95	4,055.15
Nifty PSU Banks	1.12%	6,702.70	6,628.60
Nifty Non-Banks	0.87%	28,922.75	28,674.70
Nifty Metals	0.52%	9,249.60	9,201.85
Nifty CPSE	0.40%	6,530.75	6,504.75
Nifty Chemicals	0.19%	30,102.01	30,043.50
Nifty Banks	0.08%	55,398.25	55,354.90
Nifty Private Banks	-0.18%	27,621.35	27,671.65
Nifty MNC	-0.33%	28,063.15	28,156.85
Nifty Infrastructure	-0.51%	9,007.20	9,053.65
Nifty Healthcare	-0.65%	13,980.80	14,072.35
Nifty FMCG	-0.98%	56,502.05	57,061.80
Nifty Oil & Gas	-1.10%	11,467.50	11,595.10
Nifty India Digital	-1.12%	8,758.30	8,857.75
Nifty Mobility	-1.46%	20,417.65	20,719.85
Nifty IT	-1.50%	37,403.55	37,972.35
Nifty Automobiles	-1.83%	23,515.25	23,953.15
Nifty Consumer Durables	-2.16%	37,648.50	38,478.40

Data Source: NSE

Out of 20 key sectors, 9 sectors gave positive returns while 11 sectors gave negative returns for the week. Realty, Defence, Capital Markets, and PSU banks; were the clear gainers. Defence stocks gained on volatile border situation and fresh order flows; apart from good quarterly numbers. Realty was also a case of good Q4FY25 numbers. Out of the 9 gaining sectors, only 4 sectors gained more than 1%.

Overall, average returns of the 20 sectors stood at -0.14%. The top 5 sectors delivered 1.58% returns, while top 10 sectors gave average returns of 0.89%. However, the bottom 10 sectors delivered -1.16% on average. Consumer durables, automobiles, and IT were the heavyweight sectors that came under pressure.

WEEK THAT WAS; THE GOOD, THE BAD AND THE UGLY

On the positive side, RBI transferred a record ₹2.69 Trillion as dividend to the government, drawing a fine balance between government revenues and fiscal prudence. There are strong expectations of India and the US signing a mini-trade deal in June to pre-empt tariffs. The big news in the week is a rebound in IPO markets, with another ₹6,700 crore to be raised via IPOs in the coming week. A sharp fall in dollar index, propped up the rupee.

On the downside, Core sector growth at 0.49% for April 2025 was lower than expected. The  big concern is a lack of consistency in the way Indo-US relations are shaping up. Recent developments like remittance tax, Harvard enrolment ban on foreign students, and 25% tariff on Apple iPhones exported from India to the US are dampeners. On interest rates, Fed is likely to limit to just one rate cut in 2025, while RBI may pause after the June rate cut!

STOCK MARKET TRIGGERS FOR COMING WEEK TO MAY 30, 2025

Here are key triggers that could influence stock markets next week.

• Indian government will assess the US approach to mini-trade deal. Recent US decisions like the remittance tax, Harvard admission ban on international students, tariffs on Apple exporting iPhones to the US etc; are all signs of the US trying to mollify China.
• India will see the announcement of IIP data for April and the fiscal deficit data for FY25 in this week. However, the big data point will be the GDP growth for Q4FY25 and FY25, which is likely to be better than the Q3 figure by minimum 50 bps..
• There are some key data points from the US markets too. Apart from Q1-GDP second estimate, the US BEA will also announce the PCE inflation for April. But the big data point will be the Fed minutes to be published this week, with interest rate outlook.
• IPO markets saw a small revival after the Belrise IPO got over 43 time subscription. In the coming week, mainboard IPOs are set to raise ₹6,688 Crore, led by the ₹3,500 crore IPO of Leela Hotels. IPO appetite will be closely watched in coming week.
• Key global data points. Fed minutes, PCE inflation, GDP Second Estimate, Powell Speak, Durable Goods Orders, crude stocks, trade balance, and Atlanta Fed GDP (US). ECB Lagarde speak (EU); Core CPI, Industrial Production (Japan); Composite PMI (China); and BOE MPC Speak (UK).

What does this mean for Nifty and Sensex levels in the coming week to May 30, 2025.

PARTING THOUGHTS ON NIFTY AND SENSEX LEVELS

VIX bounced this week from 16.55 levels to 17.28, reflecting the global bond markets tumult. Any sustained tapering of VIX looks unlikely at this juncture.

• Nifty closed the week at 24,853 Spot. Nifty has immediate support at 24,675 and major support at 24,380. Immediate resistance is at 24,970 and later at 25,265. Nifty remains a short trade, unless it breaks above 24,927 with volumes. Longs only above that!
• Sensex closed the week at 81,721 Spot. Sensex has immediate support at 81,110 and major support at 80,102. Immediate resistance is at 82,119 and later at 83,127. Sensex remains a short trade, till it breaks above 81,974 with volumes. Longs only above that!

The focus shifts to a slew of big macros next week; including India GDP, IIP, and FY25 fiscal deficit. In addition, key cues from the US market include Q1GDP second estimate, PCE inflation for April 2025 and the Fed minutes. The immediate challenge would be to handle the geopolitical risk fallout as well as the changing diplomatic equations globally.