D-Street Ahead: How will Indian stock market move next week? Your trading strategy—Key technical calls for Nifty, Sensex

D-Street Ahead: The Indian stock market declined for the second consecutive week after a US court reinstated broad Trump-era tariffs. US bond yields and dollar-driven volatility over trade announcements impacted global markets.

Domestic equity benchmarks Sensex and Nifty 50 logged their third straight monthly gain. FPIs bought about $2.6 billion worth of Indian shares in May, the highest since September 2024. Global sentiment improved as the US reached a 90-day tariff truce with China and advanced trade negotiations with the UK.

Indian stock market's performance

The Nifty 50 rose 1.7 per cent in May to 24,750.70, while the BSE Sensex gained 1.5 per cent to 81,451.01; both indexes are up around 12 per cent since March but remain about six per cent below their September 2024 record highs. The broader small-caps and mid-caps jumped 8.7 per cent and 6.1 per cent in May, respectively.

On the weekly front, the BSE benchmark declined 270.07 points or 0.33 per cent and the Nifty dipped 102.45 points or 0.41 per cent. The market ended the week on a cautious note. The subdued performance came amid ongoing global trade tensions and anticipation surrounding domestic policy developments.

Despite encouraging domestic cues, mixed signals from global markets kept investor sentiment on edge. Initially, optimism prevailed following the RBI’s record dividend payout and positive updates regarding the monsoon.

The benchmark indices, the Sensex and the Nifty, witnessed notable volatility through the week, eventually closing lower as investors reacted to uncertainties over US tariff developments and awaited the Reserve Bank of India’s (RBI) upcoming monetary policy decision.

On Friday, the frontline indices closed lower in a range-bound trade following losses in IT shares and sluggish trends in Asian markets due to trade uncertainty after a US appeals court temporarily reinstated reciprocal tariffs.

The 30-share BSE Sensex declined by 182.01 points or 0.22 per cent to settle at 81,451.01. The NSE Nifty dipped 82.90 points or 0.33 per cent to 24,750.70. The Nifty IT dropped after a U.S. court reinstated broad Trump-era tariffs. The Bank Nifty index outperformed, gaining 0.63 per cent to settle at 55,749, driven by strong performances in the banking sector.

Sectoral performance remained mixed in line with the overall market consolidation. The PSU Bank index led sectoral performance, surging nearly four per cent, buoyed by positive sentiment towards public sector banks.

The realty index extended its winning streak for the third consecutive week, while banking and energy sectors also ended in the green. Conversely, the FMCG sector underperformed, declining by approximately two per cent, as consumer demand remained subdued amid inflationary concerns. FMCG, auto, and metal stocks underperformed and emerged as top laggards.

Other sectors exhibited range-bound trading, with no significant breakouts observed. Among the broader markets, both the midcap and smallcap indices managed to register gains of nearly 1.5 per cent each despite the choppy trading environment.

Sensex, Nifty, and Bank Nifty technical levels to watch

According to Ajit Mishra, SVP, Research, Religare Broking, after spending the last two weeks in a consolidation phase, the Nifty is expected to soon make a directional move. Holding above the 20-day exponential moving average (20-DEMA), currently around 24,600, will be essential to maintain a positive tone.

A decisive breach of this level could trigger further profit-booking, dragging the index down toward the 24,200 mark. Conversely, a strong close above 25,200 could rekindle bullish momentum and open the path toward the 25,600+ zone.

"We continue to believe that the banking index holds the key to unlocking market momentum. It has been trading within a narrow range for over a month while sustaining above its short-term support at 55,000 (20-DEMA). A breakout above 56,000 could act as a catalyst, propelling the index toward the 57,500 level," he said.

According to Puneet Singhania, Director at Master Trust Group, Nifty concluded its second consecutive week in the red, trading below the key psychological mark of 25,000. “However, the index continues to sustain above its 21-day EMA, which is acting as a critical dynamic support level,” he said.

“The index is holding above key moving averages, supporting the uptrend. RSI is trading above 14-day SMA, currently trading at 59. Strong support lies around 24,500, a previously tested demand zone. If this level breaks, Nifty may drift lower toward 24,200. On the upside, resistance is seen at 25,000. A decisive move above this level could lead to a rally toward 25,300,” said Singhania.

Bank Nifty traded with high volatility throughout the week but managed to end positive, showing resilience near key support levels. “The index took support near its 21-day EMA and has consistently traded above this level, which is currently near the 55,000 mark,” said Puneet Singhania.

"The index is currently at the upper edge of the trading range, showing strength. Key support is placed at 55,000 and 54,500, offering a good zone for dip buying. On the upside, 56,100 is a key resistance. A sustained move above this level could trigger a sharp rally toward 57,000," he added.

Ajit Mishra believes that the banking index holds the key to unlocking market momentum. It has been trading within a narrow range for over a month while sustaining above its short-term support at 55,000 (20-DEMA). A breakout above 56,000 could act as a catalyst, propelling the index toward the 57,500 level.

D-Street trading strategy for next week

Ajit Mishra of Religare Broking maintains his constructive view on the markets and recommends looking for buying opportunities unless the Nifty decisively breaks below the 24,600 mark. Within sectors, banking and financial services remain our top picks, while FMCG and IT are expected to trade subdued.

"With the broader market showing resilience, investors should continue focusing on fundamentally strong stocks that offer a favorable risk-to-reward ratio. Staying agile and informed amid evolving macroeconomic and policy developments will be crucial for navigating the near-term market landscape," said Mishra.

On Nifty 50's strategy, Puneet Singhania of Master Trust Group said positional traders can look to buy on dips near support. For Bank Nifty, he suggests that overall, the setup remains positive, and traders can look to buy on dips.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.