Nifty eyes fresh breakout: Key levels to watch post-Indo-Pak ceasefire and US-China trade thaw

Nifty eyes fresh breakout: Key levels to watch post-Indo-Pak ceasefire and US-China trade thaw

Indian equity markets woke up to a barrage of good news on May 12. The announcement of a ceasefire between India and Pakistan boosted sentiment, setting the stage for a strong rebound after a tumultuous week. Adding to the optimism was a breakthrough in US-China trade talks, which acted as the icing on the cake. The all-round cheer sent the Nifty surging past the 24,900 mark. Is this the start of a fresh leg of rally and what are the next pit stops for key indices?

What experts say

Rohit Srivastava of Indiacharts believes that Nifty is attempting a breakout above the 24,740 zone. “It would have to sustain above 24,820 for us to believe the breakout is valid. Nifty Bank, on the other hand, needs a close above 55,700 to set the stage for a move towards 57,000 or higher,” he said. Srivastava also points out that with geopolitical risk from the Indo-Pak front easing, investor focus may shift back to macro concerns like the US dollar and bond market volatility. “Even if tariffs are rolled back, the positive sentiment could mark a top driven by over-optimism — the opposite of what we saw in March-April. Also, FIIs have unwound their short positions in index futures, reducing the potential for further short-covering. So, any further rally will rely heavily on DII support and the absence of fresh negative triggers,” he added.

Sudeep Shah, Head of Technical & Derivative Research at SBI Securities, sees fresh breakout too. He observes aggressive put writing in the 24,500–24,600 zone, suggesting strong support for the Nifty at these levels. “The 24,450–24,500 range is likely to act as a key support zone. If this holds, we don’t rule out a move towards 25,100–25,300 on the higher side,” he said. A sharp decline in India VIX also signals easing volatility after weeks of geopolitical uncertainty. Shah adds that global sentiment appears to be improving, especially with signs of a thaw in US-China relations. For the Nifty Bank index, he sees support at 54,700–54,500, with the potential to climb towards 56,000–56,300 if those levels hold.

Motilal Oswal’s Ruchit Jain feels Nifty can re-test December highs. He sees the current momentum as a breakout from a consolidation phase. “The Nifty has decisively moved above the 24,500–24,600 range. The ceasefire with Pakistan and positive developments in US-China trade talks have triggered the next leg of the rally. Now, 24,500–24,600 will serve as a crucial support zone,” he explained. Jain expects the index to re-test the December high of 24,850, with potential to move up to 25,200 thereafter. He believes the IT sector could lead this leg of the rally, given it was among the worst hit during the period of trade tensions. “India VIX has cooled off significantly and may normalise around the 16 mark, indicating reduced market anxiety,” he added.