Trade Setup for May 20: Nifty remains on the choppy side amid lack of clear direction

The benchmark Nifty 50 index slipped for the second straight day on Monday, pressured by weak global cues following Moody’s downgrade of the US government’s credit rating from its highest tier.

The market opened flat to slightly negative and gradually weakened, trading within a tight range throughout the day. The Nifty failed to hold the crucial 25,000 level and closed 74 points lower at 24,945, continuing its choppy pattern.

Despite this, the broader market showed resilience. While major indices underperformed, the Nifty Midcap 100 and Smallcap 100 extended their winning streaks to six sessions, rising 0.08% and 0.5%, respectively.

Sector-wise, Nifty Realty, PSU Banks, Pharma, and Auto gained ground, whereas Nifty IT, Media, and FMCG sectors faced selling pressure. Technology stocks, including Infosys and TCS, bore the brunt of the weakness, dragged down by Moody’s downgrade impact.

Protean eGov Technologies shares hit a 20% lower circuit after the company announced it was excluded from the next round of the Income Tax Department’s PAN 2.0 project RFP process.

Defence stocks, which had rallied as much as 40% last week, saw profit booking and fell up to 6% on Monday.

Vodafone Idea shares dropped 8%, and Indus Towers declined 3%, after the Supreme Court dismissed the companies’ urgent petition regarding their Adjusted Gross Revenue (AGR) dues. The court termed the petition as “shocking” and “misconceived.”

Investors will be watching closely the developments around the US-India trade agreement, with Union Commerce Minister Piyush Goyal currently in the US. Additionally, earnings reports from Hindalco, Aster DM Healthcare, Dixon Technologies, Max Healthcare, NHPC, and Torrent Pharma are expected to influence market sentiment in the coming days.

Foreign and domestic institutional investors have bought over ₹47,000 crore of Indian equities in May so far, providing strong market support.

Market experts remain cautiously optimistic. Siddhartha Khemka from Motilal Oswal anticipates the market to stay firm, driven by activity in key sectors.

Nagaraj Shetti of HDFC Securities expects the current choppy phase to end within 1-2 sessions, forecasting a decisive upside breakout soon. He sees immediate support at 24,800, with a sustained move above 25,100-25,200 potentially triggering sharp gains toward 25,500-25,600.

LKP Securities’ Rupak De believes the Nifty is in a consolidation phase that may continue for a few more days. He warns the index could remain under pressure unless it reclaims the 25,000 level. On the downside, Nifty may test the 24,800–24,750 zone, with a deeper correction possible if it breaks below 24,750. Conversely, a move above 25,000 could spark a rally toward 25,250–25,350.