Nifty and Bank Nifty outlook for week starting 18 May 2025 by Choice Broking Ltd
NIFTY WEEKLY OUTLOOK
The Indian equity benchmarks paused their recent rally on May 16, with the Nifty ending just above the psychological 25,000 mark. While the headline indices showed signs of mild pressure, the broader markets outperformed significantly. The BSE Midcap index gained 0.8%, and the Smallcap index added 1%, indicating continued buying interest beyond the large-cap space. This suggests that investors are becoming more confident in the market's breadth, often a bullish sign for the overall trend.
Globally, Wall Street ended mixed on Thursday, though the S&P 500 managed to recover fully from its April correction. That pullback was largely driven by concerns over U.S. President Donald Trump’s global trade war and the impact of tariffs on inflation. However, optimism has returned as investors bet on potential trade deals that could roll back steep tariffs and ease pressure on global growth. This improving sentiment could support emerging markets like India in the coming sessions.
From a technical standpoint, the Nifty has recently broken out of a Rounding Bottom pattern on the weekly chart, supported by strong volumes—a bullish signal. The pattern projects an upside potential toward 28,000 in the short term. Immediate resistance is seen at 26,000–27,000 levels, where partial profit booking may be considered. On the downside, 24,300 and 24,000 are strong support zones; any correction toward these levels should be viewed as a buying opportunity, keeping the broader trend intact.
Momentum indicators also support the bullish setup. The Relative Strength Index (RSI) stands at 61.9 and is trending upwards, indicating growing strength. Furthermore, the Nifty is trading well above its key exponential moving averages—20, 50, 100, and 200—highlighting sustained positive momentum. This technical alignment continues to favor a buy-on-dips strategy.
In the derivatives space, market volatility cooled off slightly, with India VIX dropping 23.49% to 16.55, reflecting a decline in fear and a more stable trading environment. However, heavy call writing at 25,500 and 26,000 levels signals resistance at higher zones, while strong put writing at 25,000 confirms it as a crucial support. Traders should keep a close eye on the 25,000 level—a sustained hold above it may trigger fresh buying interest, though a risk-managed approach is recommended in the near term.
BANKNIFTY WEEKLY OUTLOOK
Bank Nifty closed the week on a steady note, consolidating just below the key 56,000 mark. Despite limited movement in Friday’s session, the index held firm above previous breakout levels, reflecting underlying strength in the banking space. The weekly chart shows a breakout from a recent consolidation range, and the price action continues to hold above that breakout zone, signaling potential for further upside.
Technically, if Bank Nifty manages a decisive close above the 56,000 mark, it could unlock immediate targets of 58,000 and 59,800 in the short term. On the flip side, key support levels lie at 54,000 and 53,800—any dips toward these zones may offer attractive entry points for positional traders. Broadly, the index is trending bullish but currently stuck in a narrow band of 53,800–56,000. A breakout on either side will likely define the next directional move.
The momentum indicators support the bullish outlook, with the RSI at 64.36 and trending upward. Price action is comfortably above all major exponential moving averages—20, 50, 100, and 200—indicating continued bullish strength and trend sustainability. The setup remains favorable for buy-on-dips strategies unless price breaks below key support levels.
The broader banking sector remained resilient during the week. Heavyweights like ICICI Bank, Axis Bank, and Kotak Bank showed strong base formation with mild accumulation. HDFC Bank is also stabilizing after recent underperformance, while PSU banks like SBI remained firm near their highs, reflecting continued investor confidence in the space. The sector's stability, strong fundamentals, and upbeat sentiment support the positive bias for Bank Nifty going ahead.
On the derivatives front, India VIX has cooled to 16.55, down by 23.49%, hinting at reduced fear and more stable trading conditions. However, heavy call writing at 56,000 and 56,500 levels signals resistance in the higher zone, while strong put writing at 55,000 indicates solid support. A sustained move above 56,000 could invite fresh long positions and push the index toward higher targets.
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