May 20, 2025
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Market Analysis by HDFC Securities
by Devarsh Vakil Head of Prime Research,
Indian Markets Tumble on Rising Bond Yields and Fears of Covid Resurgence.
Indian equity benchmarks declined sharply today amid reports of increasing COVID-19 cases in Southeast Asian countries like Singapore and Hong Kong. The Nifty fell for the third consecutive session, shedding 261 points (1.05%) to close at 24,683, while the BSE Sensex dropped 873 points (1.06%) to 81,186.
Market sentiment remained negative, with 42 of 50 Nifty constituents ending in the red. The NSE advance-decline ratio stood at 1:2, reflecting widespread investor caution across sectors, particularly in auto, defence, and financial stocks.
The Indian Rupee snapped its two-day streak, falling 24 paise against the dollar to settle at 85.63. This depreciation stems from equity market declines and foreign fund outflows.
Investors also monitored ongoing India-U.S. trade discussions, adding further market pressure.
Japanese bond sell-off has elevated borrowing costs, contributing to global market uncertainty and dampening risk appetite.
Nifty Midcap100 and Smallcap100 indices closed weak, forming bearish “Engulfing” candlestick patterns. Midcap 100 fell 1.62% while Smallcap 100 dropped 0.94%. Market breadth turned negative after six consecutive positive days, with BSE advance-decline ratio at 0.58.
All sectoral indices closed in red, with Auto, Healthcare, Media, and Pharma experiencing the heaviest losses. Auto stocks were particularly weak, with three of the top four Nifty losers from this sector, amid valuation concerns and an uncertain demand outlook.
Technically, Nifty closed below its 5-day EMA for the first time since May 8, 2025, suggesting a shift to profit-booking. Support levels lie at 24,494 and 24,378, while resistance is expected in the 24,800-24,900 range.
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