Indian equity markets experienced a notable downturn on May 20, 2025, as investors engaged in widespread profit booking following a period of significant gains. Both the Nifty 50 and BSE Sensex registered sharp declines, reflecting cautious sentiment exacerbated by a lack of fresh domestic triggers and prevailing global uncertainties.
Nifty and Sensex Performance
Both benchmark indices saw significant corrections:
- Nifty 50: The Nifty 50 fell 1.05%, dropping 261.55 points to settle at 24,683.90.
- Sensex:The BSE Sensex corrected 1.06%, plunging 872.98 points to settle at 81,186.44.
India VIX (Fear Index): The India VIX, a gauge of market volatility, ended 0.12% higher at 17.39 points, indicating increased investor apprehension.
Top Market News
Several key developments influenced market sentiment:
- Global Uncertainty & US Downgrade: A major ratings agency's downgrade of US federal government debt on May 17 continued to weigh on Indian IT firms due to concerns over reduced tech spending from American clients. The Nifty IT index was a key sectoral loser.
- China's Economic Moves: China's central bank cut its main interest rate by 10 basis points to boost GDP growth, helping to cap some declines in the Indian market. Industrial production in April grew 6.1% year-on-year, though retail sales disappointed.
- Trade Deal Delays: The protracted delay in finalising the India-US trade deal contributed to investors remaining on the sidelines.
- Corporate Earnings Season: The Q4 earnings continued to drive stock-specific actions. Pfizer India surged 12% after an 85% jump in Q4 profits, while Hindalco Industries reported a 66% year-on-year jump in consolidated PAT.
FII and DII Activity
Institutional investor activity on May 19 showed net selling in the cash segment, likely influencing the cautious sentiment on May 20:
- Foreign Institutional Investors (FIIs): Net sellers with an outflow of ₹-525.95 crore.
- Domestic Institutional Investors (DIIs): Also net sellers with an outflow of ₹-237.93 crore.
This institutional selling, combined with the lack of fresh triggers after a 4% rally in the Nifty 50 and Sensex last week, led to profit booking.
IPOs, Listings and Market Buzz
The primary market remained active:
Borana Weaves IPO
- On Day 1 (May 20, 2025), the IPO witnessed strong demand, being oversubscribed 7.80 times overall. This was significantly driven by robust retail investor interest, with the retail portion subscribed an impressive 23.40 times. Non-institutional investors (NIIs) also showed strong interest, subscribing 9.90 times, while Qualified Institutional Buyers (QIBs) subscribed 1.54 times.
Grey Market Premium (GMP):
- The Grey Market Premium (GMP) for Borana Weaves IPO was reported at ₹55 on 20 May 2025. Given the upper end of the IPO price band at ₹216 per share, this GMP implies a potential listing gain of 25.46% (calculated as (₹55 / ₹216) * 100%).
Top Gainers and Losers
Individual stock performances were mixed:
Leading Gainers:
Significant Losers:
Sectoral Performance: Selling pressure was visible across most sectors, with all major sectoral indices in the red. The Nifty Auto index ended down by 2.17%. However, PSU banks drove a mildly positive day for BANKNIFTY, which outperformed NIFTY.
Economic and Global Factors
- RBI Monetary Policy: The MPC's April 2025 decision to reduce the policy repo rate by 25 basis points to 6% continued to influence market sentiment.
- Crude Oil Market Dynamics: Brent crude oil futures, which had slumped, rebounded to around $66 per barrel by May 20.
- US Federal Reserve's Stance: The Fed held interest rates steady at 4.25%-4.5% during its May 8 meeting, a "wait-and-see" approach that was largely anticipated.
- Indian Rupee: Appreciated by 10 paise against the US dollar, settling at 85.40, supported by cooling crude oil prices and a softening US dollar.
Summary of Stock Market Today
20 May 2025, was a day of consolidation and profit booking for the Indian stock market after a strong rally in the preceding week. Benchmark indices saw declines driven by cautious investor sentiment and global uncertainties, particularly the impact of the US credit rating downgrade on the IT sector and delays in the India-US trade deal. Institutional investors were net sellers, amplifying the market downturn. While broad-based selling occurred, strong corporate earnings and specific demand trends allowed some stocks and sectors, such as two-wheelers and PSU banks, to show resilience.
Investors are encouraged to stay informed and cautious as market movements continue to be influenced by a complex interplay of domestic fundamentals and evolving global cues.