Stock Market Volatility Spike Invites Bear Strikes

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Market Wrap: Sensex, Nifty Slide Amid Broad-Based Selling; Auto Stocks Take a Hit

By S JHA

MUMBAI, May 20, 2025 – Indian equity benchmarks ended Tuesday’s session on a weak note, as early gains fizzled out and selling intensified across sectors. The Sensex and Nifty started the day on a mildly positive note but failed to hold above the psychological 25,000 mark.

By the close, both indices slipped over a percent, with the Nifty ending just below 24,700. Auto stocks bore the brunt of the market correction, snapping a four-day winning streak.

The Nifty Auto index tumbled 2.2%, underscoring strong profit booking in the segment. Other key sectors, including consumption, FMCG, healthcare, and pharmaceuticals, also ended in the red, with no sector managing to stay afloat — a clear indication of broad-based bearish sentiment.

“Global markets offered little support. While the US markets closed on a muted-to-positive note overnight, Asian and European indices followed suit with minor gains. However, this wasn’t enough to lift domestic sentiment as bears took control through the session,” said Angel Broking in a note to client on Tuesday.

Futures & Volatility

Nifty futures shed 0.78%, accompanied by a sharp 15.8% rise in open interest — signaling aggressive short build-up, added the brokerage firm. It stated that “this marked the index’s weakest close in three sessions. Meanwhile, India VIX spiked to a two-day high, pointing to rising nervousness among traders.”

Market Breadth Weakens

The broader market mirrored the benchmark’s decline. Over 80% of Nifty 500 stocks ended lower, and 86% of the Nifty 50 constituents closed in the red — reinforcing the dominance of sellers.

Technical Take

Despite the slide, the Nifty continues to hover above its 10, 20, 30, and 50-day EMA levels, though it finished just above the 10-EMA. Analysts at Angel Broking suggest a cautious ‘Buy on Dips’ approach, highlighting 24,400 (20-DEMA) as a key support zone. This level aligns with a bullish gap area and the 61.8% Fibonacci retracement of the recent rally from the May 9 swing low. Immediate support is pegged at 24,550, while 25,000 remains a firm resistance level.

Stocks in Focus

CCL Products Ltd.: Broke out on both daily and weekly charts with 7x volume; RSI at 76 reflects strong bullish momentum.
Engineers India Ltd.: Hit a 5-month high with a bullish lower wick; stays above all key moving averages.
DLF Ltd.: Continued its higher high-higher low streak for a seventh session; trading with robust volumes above key averages.
Borosil Renewables Ltd.: Reported Q4FY25 net profit growth of 119.3% YoY to ₹11.1 crore, with EBITDA margins expanding 353 bps YoY to 14.5%.
Newgen Software Technologies Ltd.: Surged 16% backed by a 25x spike in weekly volume, signaling a potential multi-month breakout.

As markets prepare for a potentially volatile Wednesday, all eyes will be on key support levels to gauge whether bulls can stage a comeback or if further correction lies ahead.

(Disclaimer: This article makes no recommendation for buy or sell of shares of any company)