Trade Setup for May 16: Key levels to watch, upside targets 25,250 and 25,500

The Nifty 50 staged an impressive comeback on Thursday, May 15, climbing to its highest level in seven months. After a choppy start, the index witnessed strong intra-day buying and surged 395 points to close at 25,062 — comfortably above the psychological mark of 25,000 for the first time since October 17, 2024.

Out of the 50 stocks in the index, 49 closed in the green, reflecting strong broad-based buying.

Key Levels to Watch:

Upside targets: 25,250 and 25,500

Immediate support: 24,800

Strong downside support: 24,400

Analysts believe the overall market trend remains bullish. HDFC Securities’ Nagaraj Shetti highlighted that the gap formed on May 12 is acting as a bullish breakaway gap, supporting the rally.

Rupak De from LKP Securities noted that the recent breakout above the swing high increases the likelihood of Nifty moving towards 25,690 in the short term. However, if the index falls below 24,400, the ongoing rally may lose steam. Until then, buy-on-dips remains the preferred strategy.

Sector Highlights:

Two-Wheelers: Hero MotoCorp led gains on upbeat commentary.

Metals: Continued strength, with JSW Steel gaining over 4%.

Defence: Cochin Shipyard rose 5%, riding on strong Q4 results.

Midcaps & Smallcaps: Continued positive momentum for the fourth straight day.

Stock Buzz:

Vodafone Idea: Rose 4% after filing a fresh plea in the Supreme Court, seeking relief from ₹30,000+ crore AGR dues, citing earlier rulings.

Bajaj Auto: Board approved an additional investment of €125 million (approx. ₹1,200 crore) in its Netherlands-based subsidiary, Bajaj Auto International Holdings BV.

LIC Housing Finance: Reported a 25.4% YoY rise in Q4 profit at ₹1,368 crore. Net interest income dipped 3.2%. A dividend of ₹10 per share was recommended.

Alkem Labs: Its arm, Enzene Biosciences, reported a cybersecurity breach in its US business email system, leading to a fraudulent fund transfer. External agencies are investigating the matter.

Market Sentiment:

FIIs: Net buyers in the cash market

DIIs: Net sellers

As earnings from Bharat Heavy Electricals Ltd, Hyundai Motor India, Emami, and Delhivery are expected, stock-specific action could drive Friday's session.