Bulls in Control: Broad-based Buying Continues to Keep Sensex, Nifty Spirits High

On May 23, 2025, the Indian stock market witnessed a remarkable surge as benchmark indices delivered a robust trading performance. This was largely supported by widespread buying across various sectors, notably driven by IT stocks. As the day progressed, Indian benchmark indices, Sensex and Nifty, continued to trade firmly, demonstrating market resilience amidst global economic uncertainties.

Market Reaction

• The Sensex climbed by 704.36 points, a rise of 0.87%, finishing at an impressive 81,656.35.
• The Nifty rose by 224.40 points, or 0.91%, ending at 24,834.10.
• The rally was broad-based, with nearly all sectors showing gains except for pharma stocks.
• Strong market breadth was evident with 1,980 shares advancing against 1,288 that declined, and 141 remained unchanged.
• IT stocks led the charge, overcoming concerns of a US economic slowdown.

Sectoral Performance

IT Stocks

• IT stocks emerged as the frontrunners, buoyed by expectations of better fiscal earnings.
• Analysts at Bernstein predict the IT sector will outperform FY25 earnings, citing improved forward guidance.
• The market outlook anticipates a stronger fiscal performance by FY27, despite concerns over the US fiscal deficit.

Pharma Sector

• The Nifty Pharma index was the weakest link, affected by Sun Pharma’s cautious FY26 guidance.
• Challenges include regulatory issues for branded drugs in the US and higher taxes.
• Sun Pharma maintained a 'hold' rating with a target of Rs 1,830 per share, according to Nuvama Institutional Equities.
• Delays in launching key products like Leqselvi have weighed heavily.

Earnings Breakdown

• Broad-based buying has fueled optimism across most sectors.
• IT sector growth offsets fears of economic downturns.
• Sun Pharma’s guidance reflects industry challenges but maintains potential for future gains.

Strategy Takeaways

• The current upward market trajectory appears structurally sound, driven by quality and value rather than speculative excesses.
• Analysts suggest a 'buy-and-hold' strategy for IT stocks given anticipated earnings growth.
• The market has shown resilience and may continue a steady climb unless new valuation froth develops.

Risk Factors

• Global economic uncertainties, particularly the US economic slowdown, remain potential risks.
• Sector-specific challenges, such as those faced by pharma, could impact short-term performance.
• Investor strategies must consider potential regulatory changes and fiscal policy shifts.

Technical Analysis

• ICICI Securities forecasts indicate that Nifty could approach the 25,500 level.
• Key support levels are identified around 24,200, suggesting a steady growth path.
• Technical charts show room for expansion, bolstered by balanced sector leadership.

Conclusion

The Indian stock markets continue their upward trajectory, supported by robust buying across most sectors. While IT stocks lead the charge, potential risk in the pharma sector due to regulatory and fiscal hurdles must not be overlooked. As market fundamentals appear strong, a balanced and informed investment approach remains key to capitalizing on ongoing trends. Investors are encouraged to stay informed and agile amid evolving market dynamics.