Sensex, Nifty outlook for Monday, May 25: What to expect from stock market? Key levels, strategy

Sensex, Nifty: Domestic equity markets wrapped up a volatile week with modest gains, against a backdrop of global headwinds and currency pressures. The markets ended this week on a slightly positive note, with the BSE Sensex and NSE Nifty rising 0.23% and 0.32%, respectively. 

On Friday, the 30-pack index closed at 75,415.35 and the 50-pack index settled at 23,719.30, with both benchmarks gaining about 0.3% in the last session to end in the green. Hinting at an opening with a positive bias on Monday, May 25, Nifty futures on the NSE International Exchange were up 29 points, or 0.12%, to trade at 23,720.

Market cues

According to Ajit Mishra, SVP of Research at Religare Broking Ltd, the benchmark indices endured intraday volatility fueled by persistent rupee weakness, mixed global cues, sectoral rotation, and continued uncertainty around inflation and interest rates.  

Ponmudi R, CEO of Enrich Money, noted that easing crude oil prices and reports of indirect US–Iran talks helped revive risk appetite. 

Vinod Nair, Head of Research at Geojit Investments Ltd, echoed this sentiment, pointing out that the market continues to reward disciplined buying on weakness. “With persistent efforts to ease Middle East tensions, the rupee found much-needed support as crude prices exhibited a modest pullback,” he added.

“Persistent foreign selling continued to cap stronger upside momentum in the broader market and kept investor sentiment cautious despite intermittent recovery attempts,” Ponmudi said.

Also, the Reserve Bank of India announced a massive dividend transfer of Rs 2.87 lakh crore to the central government for FY26. Mishra highlighted that this surplus will likely provide additional fiscal flexibility and support government spending amid an uncertain global backdrop.  

Key levels to watch

Nifty: Mishra identifies immediate support around the 23,150–23,250 zone for the 50-pack index, with a further base at 22,900. Ponmudi sees near-term support higher up at 23,600, with broader support placed between 23,400 and 23,300. Both analysts said that the 23,800–24,000 region acts as a resistance hurdle for the index.  

Sensex: Focusing on the 30-share index, Ponmudi observed immediate resistance parked in the 75,800–76,000 zone. Meanwhile, the support is near the 74,600–74,400 levels.  

Strategy ahead

Given the cocktail of elevated crude prices, currency fluctuations, and geopolitical risks, analyst recommend a defensive, stock-specific approach. Mishra advised traders to avoid aggressive leverage and continue to follow disciplined risk management practices. He favors using market dips to selectively accumulate quality names in sectors like energy, pharma, and metals. He also remainspositive about themes linked to defence and capital markets.

However, Mishra cautioned in the IT sector following its recent bounce.  

Nair observed that the IT sector stood out as an outperformer last week, benefiting from attractive valuations following the recent correction. Despite sectoral divergences, Nair agrees that until macroeconomic and geopolitical factors converge favorably, a range-bound, stock-specific environment prevails.