As seen in the previous trading session, the market in today’s trade setup also showed a sideways, choppy movement throughout the day. In the previous block, we analyzed that for the market to move to even higher levels, it needs stronger reasons or triggers to support such a move. At the moment, we are not seeing any such catalysts, which is why the market continues to move sideways and is relying more on technical levels.
Global Market Analysis
Moody on USA credit rating
Moody’s downgraded the U.S. economy, which is a significant blow as it directly impacts the cost of borrowing for the U.S. This downgrade has led to a rise in bond yields, reflecting growing concerns about the U.S. economy. As a result, borrowing from international investors will become more expensive for the U.S., ultimately leading to higher interest payments. If this situation persists, it will clearly increase the overall cost of borrowing for the country in the long term.
Moody’s has downgraded the U.S. economy due to the rising debt levels and growing budget deficit. They believe it will take significant effort for the U.S. to reduce its debt in the coming years. Following this downgrade, the 30-year Treasury yield jumped nearly 5%. If this situation continues for a longer period, it could become a serious concern for the cost of borrowing.
US tarrfis on steel, aluminium and auto sector
The U.S. has maintained tariffs of nearly 25% on steel, aluminium, which have not been reduced. These high tariffs are now emerging as a significant concern for upcoming trade deal negotiations. Vedanta founder Anil Agarwal also highlighted that these high U.S. tariffs on the aluminium and steel sectors could pose serious challenges for exporters doing business in the U.S.
In response to this, Nippon Steel has announced an investment of nearly $14 billion in the U.S. economy. This development is seen as a positive move for companies manufacturing within the U.S. Such a statement from a centralized player like Nippon Steel could boost the confidence of U.S. policymakers, reinforcing their belief that high tariffs are attracting manufacturing and investment into the country.
Domestic Market Analysis for tomorrow trade setup
Nifty eyes on all time high
In the recent data release, a closer look shows that several sectors have contributed significantly to the movement in the Nifty 50—particularly the auto, banking, and metal sectors. However, one sector with the second-largest weight in the Nifty 50, the IT sector, has not contributed as much as expected.
The performance of the IT sector heavily depends on the U.S. economy and trade dynamics related to it, as a large portion of Indian IT companies’ revenue comes from the U.S. market alone. This is why the sector’s movement is closely tied to how the U.S. economy performs and how trade evolves there.
Ultimately, how the U.S. economy handles trade negotiations with the rest of the world, along with commentary on its economic outlook and future progress, will have a direct impact on the IT sector. Since the IT sector holds significant weight in the Nifty 50, any changes here will also slightly influence the overall index.
Also read; Infosys business model; How Infosys make money, expenses, Potential risk and future outlook
India’s Semiconductor sector Focus on Rise
India has set an ambitious target to capture a 5% share of the global semiconductor market by 2030. To support this goal, several companies are now taking steps to set up manufacturing facilities in India, marking a significant move toward strengthening the country’s position in the global chip industry.
Recently, the government approved five major projects aimed at boosting daily chip production to nearly 91 million units. Several key companies are actively moving into the semiconductor sector, including Tata, HCL-Foxconn, CG Power, and Kaynes Technology. These firms are playing a significant role in shaping India’s growing semiconductor ecosystem.
Commodity Analysis – Gold
Gold has been experiencing significant fluctuations recently, driven by global trade tensions and ongoing India-Pakistan conflicts. These geopolitical events have played a major role in influencing market sentiment.
Technically, gold is finding strong support at its 50-day simple moving average (SMA), which has helped reverse its recent downtrend. However, gold is currently facing a hurdle around the 94,000 level. Over the past five trading sessions, it has consistently closed below this resistance level. On the downside, the 50-day SMA continues to act as a solid support, preventing further decline.
FII and DII Analysis
For the first time in May, both FIIs (Foreign Institutional Investors) and DIIs (Domestic Institutional Investors) recorded net outflows. Although the numbers were relatively small compared to their usual buying activity, DIIs sold approximately ₹237 crore, while FIIs sold around ₹525 crore in the Indian equity market.
This marks the second instance of FIIs selling in the Indian cash market recently. As a result, the Nifty slipped by around 70 points. However, this decline is not a major concern, as Nifty is still showing strong technical support. Going forward, FII activity will be a key factor to watch, as their participation plays a crucial role in driving the market higher.
Nifty 50 Technical Analysis Outlook
As discussed in recent data, the market is showing a choppy movement, with most sectors already priced in and no fresh triggers emerging to push Nifty 50 to higher levels. A closer look reveals that the 25,200 level is acting as strong resistance, while the 24,600 level is providing solid support.
This support zone is significant because it marks the start of a recent bullish move and has formed a bullish candlestick pattern on the daily chart. Given the current setup, it seems unlikely that Nifty will break below this level in the next 5–6 trading sessions—unless some unexpected or negative news emerges.
Conclusion
The market has been showing choppy movement over the last two sessions, primarily due to a lack of fresh data and limited major buying activity. As previously mentioned, the absence of new triggers is keeping the market in a range-bound phase.
However, if the U.S. successfully concludes trade negotiations with global partners, it could provide a significant boost to the IT sector—which, in turn, would positively impact the Nifty 50.
From a technical perspective, the 24,600 level is acting as strong support, as a bullish technical pattern has formed at that zone. With no major concerns currently weighing on the market, and stable conditions overall, the outlook appears to be choppy to mildly bullish in the near term.
