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Indian equities traded in a narrow range on 20 May 2025, with major indices reflecting subdued investor sentiment. According to the Motilal Oswal Morning India report, the Nifty 50 closed marginally lower at 24,945, down 0.3%, while the Sensex ended at 82,059, also declining by 0.3%. The Nifty Midcap 100 index, however, edged slightly higher by 0.1%.

Despite the consolidation, year-to-date (CYTD) performance remains in the green, with the Nifty up 5.5% and the Sensex posting a 5.0% gain.

Motilal Oswal attributed the cautious mood to a combination of domestic earnings uncertainty, global inflation risks, and ongoing geopolitical tensions.

FII-DII Activity: Divergent Trends

Foreign Institutional Investors (FIIs) continued to exhibit caution. On 19 May 2025, FIIs recorded a net outflow of $0.1 billion, bringing the cumulative outflow for the calendar year to $9.2 billion. Meanwhile, Domestic Institutional Investors (DIIs) remained net buyers through May, with month-to-date inflows totaling $2.68 billion. The CYTD inflow from DIIs stood at $27.8 billion, underlining strong domestic support even as foreign capital remains volatile.

Motilal Oswal highlighted that DII activity has played a pivotal role in cushioning the market during periods of heightened FII outflows.

Global Market Performance

Global indices closed mixed. U.S. markets were largely flat, with the S&P 500 rising 0.1% and the Nasdaq remaining unchanged. European markets continued their upward trend, with the FTSE 100 gaining 0.2% and the German DAX rising 0.7%, the latter now up 20.2% for the year. In Asia, the Hang Seng slipped 0.1%, while the Nikkei 225 declined by 0.7%, reflecting ongoing challenges in Japanese equities.

Commodities and Currency Overview

In the commodities market, gold prices continued their strong uptrend, gaining 1.1% on the day to reach $3,240 per ounce, with a year-to-date gain of 23.5%. Brent crude oil remained flat at $65 per barrel, and is down 12.2% since the start of the year. Copper prices rose 0.5%, while aluminium declined by 1.5%.

The Indian rupee remained stable, with USD/INR closing at 85.4, down slightly by 0.1%. The USD/JPY pair moved lower to 144.8, while the USD/EUR strengthened to 1.1.

Bond Yields Remain Steady

According to the report, bond yields held firm. The 10-year Indian government bond yield closed at 6.3%, with no change from the previous session. The 10-year AAA-rated corporate bond yield stood at 7.0%. Year-to-date, both benchmarks have declined slightly, reflecting a balanced macroeconomic environment and steady inflation expectations.

Market Turnover and Derivatives Snapshot

Cash market turnover on 19 May stood at 1,247 billion. In the derivatives segment, turnover reached Rs 99,128 billion. Average year-to-date turnover in derivatives remains robust, highlighting active participation from both institutional and retail investors.

Motilal Oswal concludes that while market sentiment appears cautious in the short term, domestic institutional flows, stable bond yields, and selective sectoral outperformance continue to offer a degree of resilience.

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