Technical View: Nifty faces hurdle at 25,250, rangebound action likely to persist; Bank Nifty holds 20-day EMA

Nifty Outlook for July 25

The Nifty failed to witness follow-through buying on July 24 and closed the weekly F&O expiry session with a 0.6 percent loss. In fact, the index erased all of its previous day's gains and formed a long bearish candle on the daily chart that engulfed the previous day's green candle—a Bearish Engulfing formation—signaling weakness.

Hence, until the index decisively crosses the 25,250 level, which once again acted as a hurdle on Thursday, rangebound trading and consolidation may continue in the upcoming sessions. If the index manages to break above this resistance, 25,350–25,550 are the next levels to watch. However, a break below the 25,000 support could drag the index down towards 24,950 (the 20-day EMA) and 24,900 (the lower line of the Bollinger Bands), according to experts.

The Nifty 50 climbed to an intraday high of 25,246 during opening trades but immediately gave up those gains and remained under pressure until the close. It ended the session at 25,062, down 158 points, with above-average volumes. Overall, the index has been trading in the lower band of the Bollinger Bands for the last 10 sessions.

The bearish chart pattern of lower tops and bottoms remains intact, and Thursday’s swing high of 25,246 could now be considered a new lower top within this pattern.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the underlying trend of Nifty remains weak.

“Presence of strong overhead resistance and the formation of a bearish pattern indicate chances of more weakness in the short term. A slide below 24,900 levels could possibly open up further downside towards 24,500 in the near term,” he said.

Monthly options data suggests that the Nifty 50 is expected to trade in the 24,800–25,300 range in the near term.

On the Put side, the maximum open interest was seen at the 25,000 strike, followed by the 24,500 and 24,800 strikes, with maximum writing at the 24,800 strike, followed by 25,000 and 24,600 strikes.

On the Call side, the 25,500 strike holds the maximum open interest, followed by the 25,200 and 25,400 strikes, with maximum writing at the 25,200 strike, and then 25,100 and 25,300 strikes.

Bank Nifty

The Bank Nifty also ended lower but outperformed the benchmark Nifty 50, declining by 144 points to close at 57,066. The index attempted to break above a falling resistance trendline, but could not sustain the breakout, forming a bearish candle with a lower shadow on the daily chart. Notably, the index managed to defend both the midline of the Bollinger Bands and the 20-day EMA, which is a positive signal.

“Now it has to hold above the 57,000 zone for a potential bounce towards 57,250, then 57,500 levels. A failure to hold above 57,000 could lead to further weakness towards 56,750, then 56,500 zones,” said Chandan Taparia, Head – Technical Research and Derivatives at Motilal Oswal Financial Services.

Meanwhile, the India VIX, the fear index, rose by 1.97 percent to 10.72 after a three-day decline, but it remains in the lower zone, indicating a potential setup for a decisive breakout or breakdown. Despite the rise, it contributed to market stability.

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