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The Indian stock market bourses are expected to face a volatile week ahead given it has to react to both domestic and global cues such as Q1 earnings, nearing tariff deadline, and outcome of Federal Reserve meeting, creating an environment of caution.
Nifty briefly showed signs of recovery mid-week, climbing above its 20-day EMA on Wednesday, but the rally lacked strength and quickly succumbed to renewed selling pressure, according to a top SBI Seurities official.
On Friday, the index breached critical technical thresholds—the 50-day EMA and the 61.8 per cent Fibonacci retracement of its recent rally from 24,473 to 25,669—highlighting waning bullish momentum, said, Sudeep Shah, VP and Head of Technical and Derivative Research at SBI Securities.
The immediate support zone lies at 24,600–24,550 (100-day EMA), with a sustained drop below 24,550 potentially driving the index toward 24,200. Conversely, the 20-day EMA range of 25,100–25,150 poses a significant resistance for any near-term recovery, he mentioned.
Looking at the medium term, the Nifty has been confined to a tight range of 24,400–25,250 for the past two to three months, reflecting a stalemate between buyers and sellers. Technical indicators suggest a neutral-to-bearish bias, but a decisive move above 25,250 could spark renewed optimism, while a break below 24,400–24,450 may trigger deeper corrections.
The ongoing Q1 earnings season has disappointed, with several major firms reporting weaker-than-expected results, eroding hopes for a robust earnings-driven rally. Coupled with global uncertainties, particularly around U.S. trade policies under a potential Trump administration, the market remains on edge. Positive developments in U.S. trade talks or unexpected earnings beats could provide much-needed relief.
The Bank Nifty index, however, showed relative resilience, gaining 0.44 per cent to close near 56,500, buoyed by selective buying in major banking stocks. Despite this, it struggled to break through the 57,300–57,400 resistance zone, forming a Gravestone Doji candlestick pattern, signaling indecision and potential reversal risks. Key support lies at 56,200–56,100, with a breach possibly leading to further declines toward 55,500.
Foreign Institutional Investors (FIIs) have shifted from net buyers—investing Rs 24,011 crore from March to June 2025—to heavy sellers, withdrawing Rs 28,528 crore in July. This reversal, coupled with a sharp drop in the FII long-short ratio in index futures from 36.4 to 14.83, reflects heightened bearish sentiment, driven by a stronger U.S. dollar (+0.88 per cent in July), anticipated Federal Reserve rate cuts, and lackluster Q1 results, according to
However, the low long-short ratio suggests much of the pessimism may be priced in, potentially setting the stage for a rebound if positive triggers emerge.
Sectorally, Pharma and Healthcare stocks, including Cipla and Apollo Hospital, continue to outperform, while IT, Defense, Oil & Gas, Realty, and CPSE sectors exhibit bearish trends. Stocks like Shyam Metalics, Jindal Steel, CSB Bank, and PGEL show short-term promise. Investors should monitor the Fed’s upcoming meeting, remaining Q1 earnings, and trade developments closely, as these could dictate the market’s next move.
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