The Nifty ended July with its fifth consecutive weekly decline, forming a bearish candle and closing below the 50-day EMA.
Nifty continued its downward grind through July, closing the week with a strong bearish candle on the weekly chart, its the fifth consecutive lower close. For the week ahead, investors will be watching for India’s central bank rate decision on Wednesday, as well as a slew of corporate earnings and any commentary on the India-US trade deal.
Market Outlook
According to SEBI-registered analyst Mayank Singh Chandel, this persistent decline reflects growing weakness across the broader market.
The Nifty index is now trading below its 50-day Exponential Moving Average (EMA) on the daily timeframe, which confirms a bearish sentiment. Support at 24,500 is a crucial level to monitor, he added.
However, Chandel flags that the overall structure (defined by lower highs and lower lows) indicates that downside risks remain elevated. If the Nifty breaks below 24,500, it could lead to a sharp slide toward the 24,000–23,800 zone, especially if broader market breadth continues to deteriorate.
F&O Cues
Derivatives data shows that Call writers are active at the 25,000 and 25,200 strikes, capping the upside for now. On the downside, 24,500 and 24,000 put strikes are seeing good writing, indicating support.
He added that a breakout above 25,000 could trigger a wave of short-covering, pushing the index toward 25,500+. But if Nifty slips below 24,300, we may see accelerated selling pressure.
Volatility Watch
The India Volatility Index (VIX) remained calm through July, falling to a 7-month low of 9.86 before rising modestly to 11.54.
Chandel observed that given the backdrop of global uncertainties, such as trade tensions, FPI outflows, and economic slowdown signals, traders should stay alert for a potential spike in volatility. And that risk management is non-negotiable in this environment.
Strategy Playbook For Traders
He believes that the bearish bias stays intact as long as Nifty remains below 25,000–25,200. If the index sustains above 25,000, expect a breakout to 25,500–25,800. On the flip side, if the index falls below 24,500, weakness may intensify. A breakdown of 24,300 could invite deeper cuts.
Chandel advised traders to stay defensive, avoid aggressive positions, and wait for clear breakouts or breakdowns.
Analyst Sunil Kotak noted that on the daily charts, Nifty’s Relative Strength Index (RSI) closed below 40. He expects the index to test a major support level at 24,450 in the coming days on the weekly chart.
For the Nifty Bank, Kotak sees the next major support at 55,100.
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