Stock Market Outlook, 19 May: Sensex, Nifty Likely to Stay Volatile Amid Crude Surge, Inflation & Weak Rupee

Indian equity markets are expected to remain volatile and event-driven on Tuesday, 19 May, as investors continue to digest a mix of global and domestic macroeconomic pressures, including elevated crude oil prices, a weakening rupee, rising bond yields, and persistent inflation concerns.

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"Markets are likely to remain event-driven in the near term, with volatility expected to persist amid elevated crude oil prices near USD 106 per barrel, continued weakening rupee (touched new low of 96.2 against the US dollar), rising bond yields and mounting inflationary concerns are collectively creating a challenging backdrop for domestic equities," said Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd.

Benchmark indices witnessed sharp intraday swings on 18 May. The Nifty slipped to an intraday low of 23,317.10 in early trade but staged a strong recovery of over 300 points from lower levels, eventually reclaiming the 23,600 mark despite global uncertainties and macroeconomic headwinds. The recovery was largely driven by selective buying in heavyweight stocks.

At the close, the Sensex rose 77.05 points or 0.10% to settle at 75,315.04, while the Nifty gained 6.45 points or 0.03% to close at 23,649.95. Sectorally, Nifty IT led the gains, rallying 2.43% on strong buying interest in technology stocks. Pharma and private banking stocks also supported the benchmark indices, though gains remained limited.

However, broader markets underperformed as selling pressure persisted across mid and small-cap segments. Nifty Media, Auto, PSU Banks, and Consumer Durables ended as major laggards. The Nifty Midcap 100 declined 0.15%, while the Nifty Smallcap 100 slipped 1.26%, reflecting continued risk aversion in broader equities.

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According to Bajaj Broking Research, the Nifty formed a bullish candle on the daily chart with lower highs and lower lows, indicating ongoing consolidation amid high volatility and stock-specific movements.

"Going ahead, index holding above Monday's low (23,317) will keep the pullback intact and retesting of the breakdown area of 23,800-23,900 is likely in the coming sessions," stated Bajaj Broking Research.

However, the brokerage noted that a sustained trend reversal would require the index to form higher highs and higher lows on the daily chart and decisively move above the 23,800-23,900 breakdown zone. "Failure to do so will lead to extension of the last 4 sessions consolidation in the range of 23,200-23,900," it added.

Bajaj Broking further highlighted key support levels for the Nifty at 23,200-23,000, which align with the lower band of the April 8 bullish gap and the 61.8% retracement of the previous pullback.

Bank Nifty Outlook for Tuesday

For Bank Nifty, the index also showed consolidation with high volatility, forming a similar bullish candle pattern while testing key support zones during intraday trade before recovering.

The brokerage stated that holding above the support area of 52,700-52,400 could trigger a pullback toward 54,000 and 54,700 levels. However, a sustained move above 54,400-54,700 would be required to signal a pause in the recent downtrend. On the downside, failure to sustain support could result in continued consolidation within the 52,700-54,000 range.

Overall, market experts expect Tuesday's session to remain range-bound with a volatile bias, as global crude oil trends, currency movement, and institutional flows continue to dictate near-term direction for both Sensex and Nifty.

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