Stock market recap: Indian equity benchmarks rallied sharply on Monday, buoyed by positive global cues as easing crude oil prices and reports of progress in US.-Iran peace negotiations lifted investor sentiment.
The Nifty 50 surged 1.39% to close at 24,049.55, near its intraday high, reclaiming the psychologically important 24,000 mark. The BSE Sensex advanced 1.50% to end the session at 76,549.82.
Market breadth remained firmly positive, with 2,271 stocks advancing against 1,046 declines, while 102 shares were unchanged.
Two stock recommendations by MarketSmith India for 26 May:
Buy: ION Exchange (India) Ltd (current price: ₹408)
- Why it’s recommended: Strong presence in water treatment solutions, beneficiary of rising water scarcity, diverse industrial customer base, growing demand from government projects, strong execution capability, recurring revenue from services segment, increasing environmental compliance demand, expansion in wastewater treatment market, strong export opportunities, asset-light service business support, beneficiary of industrial capex growth, long-term growth visibility in water sector, focus on sustainable solutions, diversified product and technology portfolio, and opportunity from desalination projects.
- Key metrics: P/E: 30.08, 52-week high: ₹580.75, volume: ₹12.67
- Technical analysis: Reclaimed its 21-DMA on above-average volume
- Risk factors: Execution delays in large projects, dependence on industrial capex cycle, working capital intensive business, slow government order execution, margin pressure from raw material costs, high competition in water treatment sector, order inflow volatility, regulatory and environmental policy risks, economic slowdown affecting industrial demand, project-based revenue fluctuations, client concentration in certain sectors, rising technology investment needs, export demand uncertainty, delayed payments from government entities, and valuation risk during weak order growth.
- Buy at: ₹404–410
- Target price: ₹470 in two to three months
- Stop loss: ₹380
Fedbank Financial Services Ltd (current price: ₹165)
- Why it’s recommended: Strong parentage from Federal Bank, focus on retail lending segment, diversified loan portfolio, growth in MSME financing, expanding branch network, beneficiary of rising credit demand, secured lending business model, improving asset quality trends, strong presence in semi-urban markets, opportunity in underpenetrated segments, technology-driven lending processes, cross-selling support from Federal Bank, growth potential in gold loans, increasing financial inclusion opportunity, and scalable business model.
- Key metrics: P/E:16.89, 52-week high: ₹178.48, volume: ₹56.31 crore
- Technical analysis: Broke out of Cup-with-handle base
- Risk factors: Rising NPAs during economic slowdown, dependence on borrowing costs, intense competition in NBFC sector, regulatory tightening risk, margin pressure from higher interest rates, credit risk in MSME segment, liquidity and funding risk, slower loan growth risk, economic slowdown affecting collections, dependence on rural and semi-urban demand, asset-liability mismatch risk, higher provisioning requirements, market share pressure from banks, technology and cybersecurity risks, and valuation risk in weak credit cycle.
- Buy at: ₹163–166
- Target price: ₹200 in two to three months
- Stop loss: ₹152
Nifty 50 performance on 25 May
Indian equity markets ended sharply higher on Monday, with benchmark indices witnessing broad-based buying led by financial and banking stocks.
The Nifty 50 closed at 24,031.70, up 312.40 points or 1.32%, while the Sensex also posted strong gains as investor sentiment improved through the session. Market breadth remained firmly positive, with 2,271 stocks advancing against 1,046 declines, reflecting broad participation across the market.
Sectorally, PSU banks led the rally with a 2.9% gain, followed by financial services (+2.18%) and private banks (+2.09%). Auto, oil & gas and realty stocks also supported the upmove, while FMCG was the only notable laggard, ending marginally in the red.
The Nifty traded in the 23,922–24,054 range and closed near the day’s high, indicating sustained buying momentum into the close. The index opened with a strong gap-up and maintained momentum throughout the session, eventually reclaiming the psychologically important 24,000 mark, signalling improving near-term sentiment.
Technically, the index formed a bullish daily candle and closed above both the 21-day and 50-day moving averages, reflecting a strengthening price structure and renewed buying interest following recent consolidation.
Momentum indicators also pointed to improving market strength. The RSI rose to around the 54 level and crossed above its signal line, suggesting strengthening momentum without entering overbought territory. Meanwhile, the MACD histogram turned positive, while the MACD line showed signs of a bullish crossover near the neutral zone, indicating easing bearish pressure and improving short-term momentum.
According to O’Neil’s methodology of Market Direction, the Indian equity market has been downgraded to an “Uptrend Under Pressure” from a “Confirmed Uptrend”.
Technically, the Nifty had faced strong resistance in the 23,800–24,000 range over the past few sessions. Monday’s momentum-driven rally helped the index close above the key 24,000 level, signalling strengthening bullish sentiment and improving market breadth.
A sustained move above this level could accelerate buying interest further and open the path toward 24,300, followed by 24,600 in the near term. On the downside, 23,600 is expected to act as a key support level, where any short-term corrective decline may continue to attract buying interest.
Nifty Bank's performance
Nifty Bank opened on a strong note at 54,610.55 and maintained steady buying momentum throughout Monday’s session. The index touched an intraday high of 55,405.20 and a low of 54,590.70 before settling near the day’s high at 55,293.65, up 1,238.30 points or 2.29%.
The sharp rebound points to aggressive short covering and value buying after recent corrective pressure. Improved participation from heavyweight banking stocks also helped the index reclaim the psychologically important 55,000 mark. The formation of a strong bullish candle following a prolonged decline suggests near-term selling pressure may be easing, although confirmation of a broader trend reversal would still require the index to move above key moving averages.
Momentum indicators are also showing early signs of stabilisation. The RSI (14) improved to around 54.68 and moved above its signal average near 44.65, indicating strengthening short-term momentum and a gradual shift from bearish to neutral-bullish territory.
Meanwhile, the MACD remains below the zero line, though the histogram has narrowed significantly, suggesting weakening bearish momentum. The MACD line is also attempting a positive crossover above the signal line, which could support a continuation of the recovery if sustained.
However, the index continues to trade below its 100-day and 200-day simple moving averages, indicating that the medium-term trend remains cautious despite improving short-term internals and rotational buying interest.
Technically, immediate support for Nifty Bank is placed near the 54,600–54,500 zone, followed by stronger support around 53,800, which coincides with the 10-day SMA. On the upside, resistance is initially seen near 55,500.
A decisive breakout above the 57,000–57,200 zone would be required to confirm a broader trend reversal, as the range aligns with the 100-day and 200-day moving averages.
In the coming sessions, the index is likely to remain stock-specific, with volatility driven by global bond yields, RBI policy expectations, liquidity trends and institutional flows. Sustained stability above 55,000 could encourage a further recovery toward higher resistance levels, while failure to hold support may revive corrective pressure.
MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. It offers tools and resources to help investors make informed decisions based on the CAN SLIM methodology, founded by legendary investor William J. O'Neil. You can access a 10-day free trial by registering on its website.
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Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.