Nifty kicks off July on a strong footing; Bulls eye 26,000 and beyond

Nifty Outlook

June wrap-up: Bulls emerge strong, rollovers reflect confidence

The Nifty wrapped up the June series with a solid 3.58 percent gain, shrugging off intra-month volatility and reinforcing bullish sentiment. Futures rollover stood firm at 79.53 percent, slightly above May’s 79.10 percent and in line with long-term averages. An elevated rollover cost of 0.25 percent (Rs 63.30) signals traders’ willingness to pay a premium to carry long positions, indicating a cautiously optimistic stance for the near term.

July series opens with optimism and heavy long build-up

As the July series begins, the Nifty has seen a robust 9.1 percent jump in open interest (1.63 crore versus 1.50 crore in June), accompanied by rising prices—clear signs of aggressive long build-up. The tone remains bullish, but with a watchful eye on global triggers and sectoral rotations.

Volatility drops, but caution persists

India VIX cooled off sharply, dropping over 23 percent in June to end at 12.59 from 16.42. While this fall provides comfort to bulls, macro uncertainties and FPIs behaviour remain potential risk points. Traders are advised to stay nimble with sound risk management.

FPIs tentatively return to the party

FPIs remained cautious for most of June, with the long-short ratio hovering between 19 percent and 25 percent. However, a spike to 38 percent on the series’ final day suggests growing risk appetite. Still, the ratio remains below the critical 45 percent threshold, implying their full-fledged bullish participation is yet to unfold.

Options Data: 25,000 support firm; 26,200 caps the upside (for now)

The options landscape shows heavy Put writing at 25,000, establishing it as a strong support. On the upside, 26,000–26,200 Calls saw aggressive writing, marking it a key resistance zone. Immediate support lies at 25,200; a breakout above 25,800 could trigger a sharp short-covering move towards 26,300.

Technical Picture: Trend remains strong, buy on dips strategy favoured

Nifty has broken out from a long consolidation phase and continues to trade in a higher-high, higher-low structure. Backed by strong weekly bullish candles, the index holds above both its 10- and 20-week EMAs, with RSI on the weekly chart sustaining above 60—signs of underlying momentum.

Former resistance at 24,700–25,000 has turned into a solid support base, reinforced by strong put writing and moving average confluence. As long as the index holds above 24,700, the trend remains firmly in the bulls’ favour.

Seasonality backs the bulls

History supports the trend—9 of the last 10 July series have closed in the green, and July boasts the highest average monthly return over the past decade. This seasonal tailwind could further amplify bullish momentum.

Strategy for the coming week

•> Buy-on-dips remains the favoured approach, especially near the 25,200–25,000 zone.

•> A sustained breakout above 25,800 can unleash momentum toward 26,250–26,300, potentially marking new all-time highs.

•> Key support zones: 25,200 / 25,000 / 24,700

•> Key resistance levels: 25,800 / 26,000 / 26,200