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After a sharp sell-off in the previous session on Thursday, Indian benchmark indices Nifty 50 and Sensex opened higher on Friday, May 23, as investors looked past concerns about the widening US fiscal deficit and volatility in global bond markets.

At around 09:40 AM, the Sensex had gained 209.82 points or 0.26 per cent to reach 81,161.81, while the Nifty rose 86.00 points or 0.35 per cent to 24,695.70. Market breadth was positive, with 1,446 stocks advancing, 1,064 declining, and 137 remaining unchanged.

Broader Market Update

Broader markets showed slight weakness: the Nifty Midcap 100 dipped 0.2 per cent, and the Smallcap index declined by 40 basis points. Market volatility eased, with the India VIX falling 150 basis points, hovering near the 17 mark.

Sectorial Update

Sectoral performance was mixed. The Nifty FMCG index saw notable gains, led by ITC following its strong Q4 results. IT stocks also advanced after a bullish outlook from Bernstein. However, the pharma and healthcare sectors lagged, with the Nifty Pharma index down as much as 1.5 per cent during early trade.

Global Markets Overview

Overnight, Wall Street ended largely flat as investor caution grew over rising US Treasury yields and concerns surrounding the expanding fiscal deficit. Yields on the 30-year U.S. Treasury note climbed to their highest level since October 2023, following the US House of Representatives' approval of President Donald Trump's controversial tax and spending bill.

The Dow Jones Industrial Average slipped slightly by 1.35 points, while the S&P 500 eased 0.04 per cent. The Nasdaq Composite bucked the trend, gaining approximately 0.28 per cent.

Asian markets opened in positive territory, suggesting easing fears over U.S. fiscal risks that had earlier unsettled global markets. South Korea’s Kospi edged up 0.2 per cent, Japan’s Nikkei 225 surged nearly 1 per cent, and Hong Kong’s Hang Seng Index rose 0.4 per cent. Mainland Chinese indices, including the Shanghai Composite and CSI 100, traded in the green after recovering from early losses.

Institutional Flows

On May 22, foreign institutional investors (FIIs) turned net sellers, offloading equities worth Rs 5,045 crore, just a day after purchasing over Rs 2,200 crore. Meanwhile, domestic institutional investors (DIIs) helped cushion the market with net buying of Rs 3,715 crore, according to provisional data from the NSE.