The Nifty 50 has hit the 23,800 ceiling with bears aggressively betting against a breakout despite global market optimism. According to Axis Securities, the 23,800 level remains a key hurdle that bulls haven't been able to cross, with the index closing at 23,659 on Tuesday, down 6% since the conflict between the US, Israel and Iran began on 28 February. While global benchmarks like the Nasdaq and Nikkei surged more than 1% on Wednesday amid growing hopes of a West Asian peace deal, the Nifty struggled to follow suit, gaining less than 0.2%. The Nifty closed at 23,618 on Monday, down 0.13% from the previous session, highlighting the market's inability to break above this critical resistance level.
Bears have aggressively built positions on 23,800 call options expiring next Tuesday, with open interest nearly doubling from the previous session to 3.03 million contracts on Tuesday, surging another 20% to 3.69 million contracts on Wednesday. The price of the option simultaneously fell 30% to ₹138.15 a share from ₹195.5 on Monday, indicating bearish sentiment among options writers. As per Equirus Securities, a peace deal could induce a short covering rally by forcing bears to close out their short call positions. Index options such as Nifty expire every Tuesday, with a monthly expiry slated for 26 May, making the current positions particularly significant for the upcoming expiry cycle.
Foreign portfolio investors (FPIs) were net sellers of 222,156 cumulative index call contracts (Nifty and Bank Nifty) as of Wednesday's close, while retail investors, domestic institutions, and proprietary traders were net buyers. FPIs' total secondary-market sales from 1 January to 19 May stood at ₹2.31 trillion, just ₹9,000 crore shy of their record ₹2.4 trillion sale in the whole of 2025. This sustained selling pressure has turned the 23,800 mark into a formidable barrier, with bears aggressively building positions on call options amid hopes of a last-minute breakthrough in West Asian negotiations. The bearish stance is further reinforced by the activity of major market players, with FPIs' continued selling creating additional resistance for the index.
Market experts predict Nifty 50 could reach 28,000–30,000 by FY27, driven by earnings growth amid global uncertainties. According to reports from The Hindu BusinessLine and recent webinars hosted by smallcase, benchmark equity indices could see gradual gains in FY27, with the Nifty 50 expected to trade in the 28,000–30,000 range by the end of the financial year. Market experts said FY27 is likely to be an earnings-led year rather than a valuation-led rally, with investors expected to focus more on sustainable profitability, execution and stock-specific opportunities instead of aggressive multiple expansion. As per smallcase managers, the outlook remains supported by India's domestic growth momentum and resilient corporate profitability, despite recent market volatility.
Experts expect Nifty 50 earnings per share to be in the ₹1,280–₹1,320 range in FY27, with the index likely to trade at 22x–24x valuations. As reported by The Hindu BusinessLine, Ashwini Shami, president and chief portfolio manager at OmniScience Capital, said the projected Nifty 50 range implies a potential upside of 15–25 per cent from current levels, supported by sectors such as banking, capital goods, telecom and domestic manufacturing themes. Anuj Jain, CIO and co-founder of Green Portfolio Pvt Ltd, noted that sectors linked to domestic capex and manufacturing, including capital goods, industrials, defence and BFSI, continue to offer favourable earnings visibility and policy support. According to smallcase managers, defensive pockets such as pharma and select FMCG companies could provide portfolio stability amid heightened volatility, while IT services may gradually recover as global demand conditions improve.
