Technical View: Bearish sentiment may prevail until Nifty decisively takes out today's high

Nifty Outlook for August 1

The Nifty 50 showed a smart recovery after the expected 25 percent tariff-led gap-down opening, climbing above the 50-day EMA (24,930). However, it could not sustain this level due to pressure at higher levels and ultimately ended the F&O expiry session with a moderate loss on July 31.

According to experts, the bearish sentiment amid consolidation is expected to prevail until the index decisively takes out today’s high of 24,957. On the lower side, the 24,600 level or the 100-day EMA is expected to act as a support.

The Nifty 50 started the trade more than 200 points down at 24,642 and corrected further to 24,635. However, the benchmark index recovered all those losses and climbed to 24,957 in the later part of the session. This rally could not sustain for long due to profit booking in the late trade. In between, the index defended the current week’s intraday low and closed at 24,768, down 87 points, forming a bullish candle with a long upper shadow on the daily chart—signaling pressure at higher levels.

“The index continues to trade below the 50-day EMA, confirming a bearish trend. The RSI is in a bearish crossover,” said Rupak De, Senior Technical Analyst at LKP Securities.

Despite several negative setups, a hidden positive divergence has been observed over the past 2–3 days, indicating a potential bullish reversal. This setup may play out well if the Nifty decisively moves above 25,000, he noted.

On the downside, support is placed at 24,600. “A range-bound movement is expected until the Nifty breaks out of the 24,600–25,000 range,” he added.

Weekly options data indicated that the Nifty may continue to face resistance at 25,000, with immediate support at 24,700, followed by key support at 24,500.

On the Put side, the maximum open interest was seen at the 24,000 strike, followed by the 24,500 and 24,800 strikes. Maximum writing was at the 24,000 strike, followed by the 24,700 and 24,500 strikes.

On the Call side, the 25,000 strike holds the maximum open interest, followed by the 25,200 and 25,500 strikes. Maximum writing was at the 25,000 strike, then at the 25,500 and 24,800 strikes.

Bank Nifty

The Bank Nifty also, as expected, fell sharply and tested an intraday low of 55,547, breaking the 55,800 support level. However, it rebounded sharply in the afternoon session up to 56,406. Once again, selling pressure emerged in the latter part of the session due to profit booking, and the index ended at 55,962, down 189 points, forming a bullish candle with a long upper shadow and a minor lower shadow on the daily timeframe.

Currently, the index is trading below both its 20-day and 50-day exponential moving averages, with both EMAs exhibiting a downward slope—a sign of prevailing weakness. Additionally, the daily Relative Strength Index (RSI) is quoting at 42.02 and continues to trend lower, reflecting fading momentum and increasing bearish pressure.

The daily MACD remains bearish as it is quoting below both its zero line and signal line. The MACD histogram is also suggesting a pickup in downside momentum.

Going ahead, according to Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities, the 55,500–55,400 zone will act as important support for the index. If the index slips below the 55,400 level, then the next crucial support is placed in the 54,700–54,600 zone.

On the upside, the 56,500–56,600 zone will act as an immediate hurdle, he said.

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