May series opens with renewed optimism, hinting at a bullish-to-rangebound outlook, albeit accompanied by elevated volatility

April Series Recap: Bulls end the series with a bang

Nifty index wrapped up the April series on a firm footing, registering a solid gain of 2.77%, reinforcing the prevailing bullish sentiment. Notably, Nifty futures rollovers jumped to 79.08%, up from 76.09% in March, aligning closely with the three- and six-month averages of 79.80% and 79.62%, respectively. This elevated rollover figure, combined with a higher rollover cost of 0.52%, suggests that traders are showing increased confidence by carrying forward their positions. This signals a likely extension of the ongoing bullish phase, albeit with measured caution as market-sensitive events approach.

May Series Begins: Bullish carryover, but OI contraction adds a twist

Kicking off the new series, Nifty holds an open interest (OI) of 12.82 crore shares, a sharp decline from April’s 14.07 crore shares. This OI drop alongside price gains indicates aggressive short unwinding, a sign that bears are swiftly exiting their positions. The fresh series opens with renewed optimism, hinting at a bullish-to-rangebound outlook, albeit accompanied by elevated volatility as traders brace for upcoming triggers.

Volatility Watch: VIX spikes on global cues, stays elevated above comfort zone

April witnessed wild swings in India VIX, the market’s volatility barometer, which surged from 13.30 to a peak of 23.18—driven by global unease over the US Trade Tariff standoff—before easing to 17.15 by series-end. Despite the cool-off, VIX remains perched above the psychological 15-mark, keeping market nerves on the edge. With a temporary 90-day pause in US tariffs, persistent global growth concerns, geopolitical tension, and gold scaling all-time highs, volatility could re-emerge swiftly. In this backdrop, traders must prioritise risk management as heightened uncertainty continues to weigh on the broader market.

FPI Flows: Short covering signals a shift in sentiment

Foreign Portfolio Investors (FPIs) maintained a guarded stance through the early part of April, but gradually shifted toward cautious optimism as the series unfolded. The FPI long-short ratio, which slipped from 35.02% to a mid-series low of 21.59%, staged a sharp recovery to 39.60% by the series close—a clear indication of broad-based short covering accompanied by selective long additions.

Although the positioning remains far from aggressive, the rebound underscores an early revival in institutional sentiment. Should global macro uncertainties—especially around the paused US tariff imposition—ease further, it may unlock a stronger wave of FPI inflows, potentially reinforcing the current bullish narrative in Indian equities.

Options Market Radar: Key battle zones identified

In the options landscape, traders are drawing their lines. On the upside, 25,000 and 25,500 strike Calls are seeing the highest build-ups, emerging as formidable resistance levels. On the downside, 24,000 Put holds maximum open interest, with 23,500 offering a solid secondary support. A decisive move above the 24,500 zone could ignite a short-covering rally, opening the doors for a bullish sprint toward the 25,000 mark.

Technical Outlook: Structure points to continuation, not exhaustion

From a technical lens, the Nifty index has decisively broken past the crucial three-month resistance zone at 24,200, signalling a meaningful structural shift in market sentiment. This breakout follows a strong rebound from April lows, validated by a bullish pin bar formation on the broader time frame and a sustained close above the 10- and 20-month exponential moving averages—reinforcing the strength of the ongoing uptrend.

The 23,700–23,500 zone, previously a major resistance, has now flipped into a formidable support base, supported by key moving averages and aggressive Put writing, further anchoring the bulls’ case. Sectoral indices are displaying healthy continuation patterns, while heavyweight stocks are fuelling the momentum, painting a constructive setup. A decisive close above 24,500 could act as the next trigger for a sharp move higher, potentially paving the way for Nifty to scale the psychological 25,000 mark in the near term.

Strategy Playbook: Buy-on-dips favoured as bulls guard key support zone

As long as Nifty continues to defend the crucial demand zone between 23,500 and 23,700, the bullish grip on the market is expected to remain firm. A sustained breakout above the 24,500 resistance could ignite a fresh wave of long positions and aggressive short-covering, setting the stage for a swift rally toward the 25,000 mark and potentially higher.

In this backdrop, traders are encouraged to maintain a “buy-on-dips” approach, while closely tracking the battle between support and resistance zones. With volatility still elevated, tactical risk management remains key in navigating the path ahead.

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