Markets Ease While Industrial Output Beats Expectations in May 2026

Index Update: The Nifty 50 declined 109.75 points to close at 23,946.25, reflecting mild profit booking after the recent recovery. Despite the decline, the index continues to trade above its 51-day EMA at 23,851.98, indicating that the broader medium-term trend remains constructive. The 14-day RSI stands at 53.89, suggesting neutral momentum with a slight positive bias. Holding above the 51-day EMA may support renewed buying interest, while a decisive break below this level could lead to further downside pressure. Immediate support is placed near 24,000.00 and 23,850.00, while resistance is seen around 24,261.60 and 24,400.00. A sustained move beyond these chart-based levels could provide clearer direction for the index's next phase of trading.

Macro Update: India's industrial production grew 5.1% YoY in May 2026, up from 4.9% in April and above market expectations of 4.7%, marking the strongest expansion since February. Growth was supported by 9.9% growth in electricity output, while manufacturing growth eased to 5.5%. Meanwhile, mining and quarrying output contracted 1.6% during the month.

Top Market Movers: On Monday, Max Healthcare Institute Ltd. (NSE: MAXHEALTH)led the gainers with a 2.36% increase, closing at INR 1,149.90 followed by Coal India Ltd. (NSE: COALINDIA) up 2.17% at INR 444.85 and Dr. Reddy's Laboratories Ltd. (NSE: DRREDDY) which rose 1.87% to INR 1,375.70. On the downside followed Kotak Mahindra Bank Ltd. (NSE: KOTAKBANK) saw the largest drop, falling 3.30% to INR 395.50 followed Mahindra & Mahindra Ltd. (NSE: M&M) down 2.80% to INR 3,093.00 and Adani Enterprises Ltd. (NSE: ADANIENT) which dropped 2.49% to INR 2,962.50.

Commodity Update: The U.S. dollar traded with a weaker tone on Monday but remained on course for its strongest monthly performance in nearly a year as geopolitical tensions in the Gulf continued to support demand ahead of key U.S. labour market data, which could influence the Federal Reserve's interest rate outlook. Gold declined 0.27% to USD 4,085.75 per ounce, while silver fell 0.61% to USD 58.87. Copper gained 0.21% to USD 13,368.00 per tonne, and Brent crude oil advanced 0.80% to USD 72.56 per barrel amid renewed U.S.-Iran tensions.

Our Stance: The Nifty 50 continues to hold above its 51-day EMA, indicating that the broader trend remains positive despite recent profit booking. Better-than-expected industrial production points to steady economic activity. However, geopolitical developments, commodity price fluctuations, and upcoming global economic data may influence investor sentiment and market direction in the near term.

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