Nifty’s 25,000 dilemma: Stuck in a 1,000-point range for 19 sessions. Will the index break free?

India’s benchmark Nifty index rallied sharply from a low of 21,744 to hit a 2025 high of 25,116 — a gain of 3,372 points or 16%. However, since then, it has remained stuck in a narrow 1,000-point range, struggling to sustain a breakout above the 25,000 mark. Experts caution that this sideways phase could persist amid ongoing market challenges.

Since May 9, 2025, Nifty has been fluctuating between 24,000 and 25,000, closing slightly above 25,000 only on a few occasions. The last time it ended above that level was on May 15, when it closed at 25,052.

Commenting on Nifty’s failure to break this logjam for the past 19 sessions, Nilesh Jain, Head Vice President, Equity Research, Technical and Derivatives at Centrum Broking, said that Nifty is facing a strong resistance around the 25,050 mark and has continued to consolidate within a narrow range. Jain sees the overall outlook as positive as long as the index holds above the 200-DMA, which is currently placed at 24,070.

What's stopping bulls?

Karthick Jonagadla, smallcase Manager and Founder at Quantace Research, attributes this to the positioning of CALL and PUT writers in the options chain. "The weight of positioning in the options still favours more sideways drift. The June 26 monthly [monthly expiry] book shows the heaviest pins at 24,000 PE (72,500 lots, 5.4 million shares) and 25,000 CE (69,400 lots, 5.2 million shares). Writers on both strikes collect the maximum theta if Nifty dies somewhere between them, so every intraday push is rapidly hedged back toward the 24,600-24,800 gamma valley where their net exposure is flattest," he said.

With India VIX at 15.8, down from 18.1 seen last Thursday, there is little premium to tempt long volume traders into forcing a break, he opined.

Potential trend breakers

Jain expects Nifty to oscillate within the 24,000–25,100 range with multiple support levels starting at 24,500, followed by 24,350.

Jonagadla concurred with the view expecting Nifty to move between 24,000 and 25,000 corridor through the June month, arguing consolidation would continue “unless we see a decisive migration of open interest above 25,000—or a macro shock that jars volatility”.

But if Nifty has to cross this hurdle, tech and auto stocks have to fire, opines Jain.

The IT sector carries 11.3% weight in Nifty and is only second to the financial stocks. The Nifty IT index has corrected 1.4% in the past one week, more than the former's decline of 0.5%.

After the US-China struck a tariff deal agreeing to a 90-day pause on May 12, IT stocks rallied strongly helping Nifty to sustain above the 24,000 mark. Notwithstanding the past one week’s losses, it is still trading 3% up over a 1-month period, outperforming Nifty’s 1.1% uptick.

Meanwhile, Nifty Auto is down 0.5% over the past week and with nearly 5% returns in the last month, it has outperformed the broader Nifty index. With a weight of 7.15%, it is the fourth biggest contributor in Nifty.

Also Read: Auto Q4FY25 Wrap: Two-wheelers lead PAT surge with TVS Motor, Eicher in front; top 13 counters to buy

Jain’s expectations from both these sectors are more “meaningful”. “A decisive breakout will likely require support from IT stocks in the sessions ahead,” he added.

Jonagadla, on the other hand, is convinced that a sector mix would push Nifty decisively beyond 25,000. "Domestic defensives and rate-sensitives rather than the heavyweight banks now catching their breath. Non-bank financials—large NBFCs and life insurers—should lead the charge," he added. FMCG and consumption stocks must also throw their weights around, he opined.

“Pharma also offers an additional tailwind with slightly weaker rupee which cushions export realisations just as regulatory clearance rates normalise, while sector valuations remain at a discount to long-term averages,” he further said.

Q4FY25

While global factors count, earnings remain the most important factor for the market's trajectory.

Nifty delivered a fourth successive quarter of single-digit net profit growth since the pandemic of 2020 at 3%, according to estimates by Motilal Oswal. Though they were better than 2%, expected by this brokerage.

MOFSL's broad-based analysis reveals 13 sectors exceeding expectations in the 4QFY25 corporate earnings, showcasing widespread outperformance across aggregates.

Also Read: Nifty's PAT grew 3% in Q4FY25, beat Motilal Oswal's estimates; Bharti Airtel, HDFC Bank among top 5 contributors

3 tailwinds to watch out for

1) RBI policy: The Reserve Bank of India (RBI) is expected to slash repo rate by another 25 bps on Friday, making it third in a row. This could be a positive trigger for rate sensitive sectors like banks, real estate and auto.

2) A record May GST haul and forecasts of an above-normal monsoon both feed rural demand and bolster urban discretionary spending, keeping top-line momentum intact even if global growth wobbles, Jonagadla of Quantace Research.

3) Indian macros: Jonagadla sees Indian macros as supportive but not catalytic. "Q4 GDP surprise at 7.4 %, May GST receipts set a Rs 2.01-lakh-crore record, and a 10-year G-Sec yield just above 7 % signals an RBI easing bias," he said.

How to trade?

MOFSL’s model portfolio stance remains unchanged, with a distinct bias towards large-caps and domestic plays, given the current volatile backdrop. “We are OW (overweight) on BFSI, consumer discretionary, industrials, healthcare, IT and telecom while we are underweight on Oil & Gas, cement, automobiles, real estate and metals," MOFSL said.

Jain said that a bullish signal has emerged with a golden crossover, as the 50-DMA has moved above the 200-DMA. A ‘buy on dips’ strategy is advisable.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)