Indian markets snapped two weeks winning streak and took a breather after breaking out from five week long consolidation. The NIFTY50 index consolidated broadly in a range of 400 points and ended the week at 25,461, down 0.4%, while SENSEX dropped 0.7% to 83,432.
However, the broader indices outperformed their benchmark peers as investors stayed cautious ahead of the U.S. and India trade deal finalisation and July 9 tariff deadline. Both Midcap 150 and Smallcap 250 index gained 0.6% and formed a doji candle on the weekly chart.
Sectorally, Consumer Durables (+2.7%) and PSU Bank (+1.9%) advanced the most, while Real- Estate (-2.2%) and Private Banks (-1.5%) declined the most.
Index breadth
The breadth of the NIFTY50 stocks maintained its bullish momentum, with over 76% of its constituents trading above their 50-day moving average. The week began with the reading of 76%, which dipped to 66% during the weekly expiry of NIFTY50 options contracts. However, the index rebounded on Friday, closing the week back at 76%.
This indicates that the broader breadth remains positive and comfortably above the critical 50% threshold. As highlighted in our earlier blogs, the first sign of weakness will emerge only if 50% of NIFTY50 stocks sustain below their respective 50-day moving averages.
FIIs positioning in the index
Foreign Institutional Investors (FIIs) increased their bearish open interest on index futures by 50% and shifted the long-to-short ratio to 29:71. They started the July series with a ratio of 38:62 and the net open interest of -33,518 contracts. Last week, the net open interest of the FIIs on index futures stood at -65,687 contracts, indicating weakness.
In the upcoming sessions, a rise in the bearish positions accompanied by negative price action will indicate weakness. To track this ratio, you can login https://pro.upstox.com/ ➡️F&O➡️FII-DII activity➡️FII Derivatives.
Meanwhile, the cash market activity of the FIIs was in line with their bearish position on index futures as they offloaded shares worth ₹6,652 crore. On the flip side, the Domestic Institutional Investors supported the markets and purchased shares worth ₹6,831 crore.
NIFTY50
From the technical standpoint, the NIFTY50 index formed a pause candle on the weekly chart following a breakout of five week long consolidation. The index protected the crucial support zone of 25,200 on a closing basis and consolidated at higher levels. Meanwhile, the immediate resistance for the index remains around 25,800 zone. Unless the index breaches this consolidation range on the closing basis, the trend may remain sideways to bullish.
NIFTY Oil & Gas
The NIFTY Oil & Gas sectors sustained bullish momentum after the crossover of 21-week and 50- week exponential moving averages and ended the week above previous week’s high. Majority of its constituents ended the week in the green except for Petronet LNG and Adani Total Gas. Meanwhile, Indraprastha Gas, Bharat Petroleum and Gujarat Gas advanced in the range of 4% to 5%.
️Key events in focus: Globally, July 9 marks an important deadline as the White House’s 90-day pause on new tariffs ends. So far, the U.S. has signed trade deals with the U.K. and Vietnam, and reached a temporary truce with China to allow more talks. But with over 100 countries still waiting for agreements, President Trump has said he won’t extend the deadline. Also, the U.S. Federal Reserve will release the minutes from its June meeting on Wednesday.
Earnings blitz: First-quarter earnings season kicks into high gear next week, with Tata Consultancy Services and Tata Elxsi will announce earnings on July 10. Consecutively, Avenue Supermarts (DMART) will announce earnings on July 11, Friday.
️Oil: Crude prices traded in a narrow range after a sharp decline and rose nearly 2% and formed a neutral candlestick pattern on the weekly chart. Meanwhile, the OPEC+ agreed on Saturday to increase the output by 5,48,000 barrels per day in August. The production hikes come as OPEC+ scales back two years of sharp cuts, partly to offset the economic impact of persistently low oil prices.
✏️Takeaway: The NIFTY50 index traded in a narrow range after the breakout of 25,200 zone and consolidated at higher levels. The index formed a neutral or a pause candle on the weekly chart, indicating rangebound movement. For the upcoming sessions, traders can monitor the crucial support zone of 25,200. Unless the index breaks this zone on a closing basis, the trend may sustain the positive momentum. Meanwhile, the resistance for the index remains around 25,800. A break of this range will provide further directional clues.
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