Stocks: Nifty Forms Small-bodied Candle Amid Rate Cut Hope

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Markets Rebound on Cooling Inflation; Metal Stocks Shine, Volatility Eases

By S Jha

Mumbai, May 14, 2025 — Indian stock markets staged a modest rebound on Wednesday, buoyed by easing retail inflation and strong performance in select sectors. The BSE Sensex edged up 93.20 points to close at 81,241.42, while the Nifty 50 gained 80 points, settling at 24,666, marking a 0.36% rise.

The session remained largely range-bound, with benchmark indices trading within a narrow 150-point band before ending with modest gains. A small-bodied candle on the Nifty daily chart signaled market consolidation and indecision at higher levels, hinting at a time-wise correction phase rather than a structural shift.

Inflation Drop Lifts Sentiment

Investor mood improved as India’s retail inflation cooled to a six-year low of 3.16% in April, raising expectations of possible rate cuts by the Reserve Bank of India (RBI). The favourable macroeconomic data played a pivotal role in market recovery after Tuesday’s sell-off.

Sector Snapshot: Metals and Midcaps Lead

Metal stocks were the day’s standout performers, with the Nifty Metal Index climbing 3%, driven by a 5% surge in Tata Steel Ltd. The sector’s higher high, higher low pattern signals sustained momentum.

Mid-cap and small-cap stocks also outperformed, with the BSE Midcap Index rising 0.99% and the Smallcap Index gaining 1.44%.

Realty stocks joined the rally, while Banking and Financial Services remained subdued. The Bank Nifty ended 0.28% lower at 54,801, despite high-volume trades in IndusInd Bank Ltd.

Volatility Drops, Derivatives Show Bullish Bias

The India VIX fell by 5%, hitting a 10-session low and logging its third consecutive decline, reinforcing a risk-on sentiment. In the derivatives segment, Nifty futures saw a 2.91% drop in open interest with a 0.38% rise in price, suggesting short covering.

F&O positioning reflected a bullish undertone, with 130 long buildups, 40 short coverings, and only 11 long unwindings.

Technical Outlook

Technically, markets continue to consolidate within Monday’s bullish candle range of 24,350–24,950. Analysts maintain a positive bias, advocating a buy-on-dips approach with immediate support at 24,500 and resistance near 24,800.

Stock Highlights

HBL Engineering Ltd. surged 12.3% on 23x volume, hitting a 3-month high, with an RSI of 68 indicating strong momentum.
Titagarh Rail Systems Ltd. rose 8.68% in futures with a 12% increase in OI, bouncing off a triple bottom formation.
NBCC Ltd. jumped 5%, forming a Three White Soldiers pattern and reaching a 6-month high.
Union Bank of India posted its fourth consecutive gain, rising 3.18% and touching its highest level since August.
Rec Ltd. dropped 2.8%, with a 17.12% spike in OI, reflecting aggressive short build-up.
Berger Paints reported an 18% YoY jump in Q4 FY25 profit to Rs 262.9 crore, revenue rose 7.3% to Rs 2,704 crore.
Siemens rose over 4% after Q2 revenue increased 2.5% to Rs 3,809 crore, although net profit declined 25%.
RITES advanced 4% on reporting a 3.4% YoY rise in net profit to Rs 141 crore.
Raymond Ltd. adjusted for its 1:1 demerger of Raymond Realty, effective May 14.

Other Key Developments

PayU received final RBI approval to operate as an online payment aggregator under the Payment and Settlement Systems Act, 2007.
Defence stocks like Paras Defence and Garden Reach rallied amid heightened geopolitical tension and “Operation Sindoor,” collectively adding ₹86,000 crore to the sector’s market cap.

Outlook

Despite mixed global cues, Indian markets displayed resilience, driven by strong sectoral performance and macroeconomic optimism. However, analysts caution that consolidation may persist in the near term, and traders should closely watch the 24,350–24,950 range for directional clues.

(Disclaimer: This article makes no recommendation for buy or sell of any shares or any kind of trades in the stock market.)

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