Nifty 50 Analysis 12 May 2025 : Anticipate recovery as a result of the India-Pakistan ceasefire. It might not hold up at the top. Take caution when climbing, especially around 24200 and 24400 levels.

Hello everyone,

The recent India-Pakistan ceasefire, announced on Saturday, May 10, 2025, is poised to positively influence the Nifty 50 index and broader Indian markets in the upcoming week. Here's an analysis of the anticipated impact:

Market Sentiment and Expected Reaction

Investor Relief: The cessation of hostilities is expected to alleviate investor concerns, leading to a potential rebound in the markets. Analysts anticipate a positive opening on Monday, with sectors like travel, hospitality, and banking likely to see gains.  

Foreign Institutional Investors (FIIs): Prior to the escalation, FIIs had been net buyers in Indian equities. The de-escalation may encourage them to resume their buying spree, providing further support to the market.  

Technical Outlook for Nifty 50

Support Levels: The index found strong support in the 23,900–23,935 range, which could serve as a base for a potential upward movement.  

Resistance Levels: A close above the 24,000–24,054 zone would be crucial for a sustained recovery.  

 Cautionary Notes

Fragile Ceasefire: Reports indicate that Pakistan may have violated the ceasefire shortly after its announcement, introducing an element of uncertainty.  

Volatility: The Nifty volatility index had surged to 21.48 during the conflict, reflecting heightened market nervousness. While the ceasefire may reduce volatility, investors should remain cautious.  

 Investor Strategy

Short-Term: Monitor the market's reaction to the ceasefire, focusing on sectors poised for recovery. 

Long-Term: Maintain a diversified portfolio, keeping an eye on geopolitical developments and macroeconomic indicators. 

In summary, while the ceasefire brings a welcome respite and potential for market recovery, the situation remains fluid. Investors should stay informed and consider both opportunities and risks in their decision-making. 

The Nifty 50 is currently exhibiting mixed signals. While some indicators like the RSI and Stochastic RSI suggest oversold conditions, others like the Stochastic Oscillator and Williams %R point to overbought scenarios. The presence of a "golden cross" in moving averages indicates potential bullish momentum. However, the high ADX value denotes a strong trend, and traders should confirm the trend's direction with additional analysis. Given the high ATR, expect significant price fluctuations. It's advisable to approach the market with caution, considering both bullish and bearish possibilities. 

More technical details are as follows 

Key Technical Indicators

Relative Strength Index (RSI 14): 30.20 – Indicates oversold conditions, suggesting potential for a price rebound.  

Stochastic Oscillator (9,6): 97.28 – Signifies overbought territory, which may precede a price correction.  

Stochastic RSI (14): 19.01 – Reflects oversold conditions, supporting the possibility of an upward movement.  

MACD (12,26): **-105.46** – A negative value suggests bearish momentum.  

Average Directional Index (ADX 14): 47.76 – Indicates a strong trend, though the direction (upward or downward) should be confirmed with other indicators.  

Williams %R: **-3.01** – Near zero, pointing to overbought conditions.  

Commodity Channel Index (CCI 14): **-86.22** – Suggests the index is nearing oversold levels.  

Average True Range (ATR 14): 102.03 – Reflects high market volatility.  

 Moving Averages

50-day Exponential Moving Average (EMA): Recent analyses indicate that the 50-day EMA has crossed above the 200-day EMA, forming a "golden cross," which is typically a bullish signal.  

Key Technical Levels

Support Zones: 23,900–23,935: Aligns with a critical Gann angle; a break below may lead to further downside towards 23,750–23,666. 

Resistance Levels: 24,166: A breach above this could trigger a swift move towards 24,323–24,444. 

Trend Indicators:

Nifty has closed above its 200-day SMA at 24,044, suggesting a bullish trend.

The Gann Monthly Trade Level is at 24,211, with the index closing above it, reinforcing bullish momentum.  

Nifty Futures Overview

Current Level: Nifty May Futures are trading around 24,065.50, reflecting a decline of 0.85% on May 9.  

Open Interest (OI): The OI stands at 1.26 lakh contracts, indicating a liquidation of 1.5 lakh contracts, suggesting unwinding of long positions.  

Cost of Carry: An increase in the cost of carry implies that traders are paying a premium to hold positions, often a sign of bullish sentiment. 

 Options Chain Analysis

Put-Call Ratio (PCR): The PCR is at 0.73, indicating a higher concentration of calls over puts, which can be a bearish signal. 

Maximum Open Interest (OI):

Calls: Highest at 24,200, followed by 24,300.

Puts: Highest at 24,000, followed by 23,800. 

This distribution suggests a potential trading range between 23,900 and 24,300 in the near term.  

Institutional Activity:

FIIs: Net sellers of ₹3,798.71 crore.

DIIs: Net buyers of ₹7,277.74 crore.  

Trading Strategy:

Bullish Scenario: Consider long positions if Nifty sustains above 24,166, targeting 24,323–24,444.

Bearish Scenario: If Nifty breaks below 23,900, it may test lower supports at 23,750–23,666.