Technical View: Short term selling pressure likely if Nifty breaks 25,400, VIX remains favourable for bulls

Nifty Outlook

The Nifty 50 remained lacklustre throughout the session and closed flat on July 7, as market participants awaited the US-India trade deal and maintained caution ahead of the July 9 deadline for the 90-day pause on the imposition of reciprocal tariffs by the United States.

Going forward, the index needs to take support in the 25,300–25,350 zone, which coincides with the upward-sloping support trendline that previously acted as resistance, as well as the 78.6% Fibonacci retracement level from 26,277 to 21,744. Below this zone, 25,200 (the 20-day EMA) is the level to watch. On the higher side, 25,500–25,600 is expected to act as the resistance zone, according to experts.

After opening lower at 25,450, the Nifty 50 hit an intraday high of 25,490 and a low of 25,407. It finished the session at 25,461, up 0.30 points, and formed a Doji-like candlestick pattern on the daily charts, signalling indecision among bulls and bears.

Having formed this Doji pattern in a sideways range movement, the predictability of the pattern could be limited, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

According to him, the short-term trend of the Nifty is choppy, but the near-term uptrend remains intact. “Any weakness from here could find support around the 25,300 levels. The next overhead resistance is placed at 25,700,” he said.

The 26,000 strike holds the maximum Call open interest, followed by the 25,500 and 25,600 strikes, while the maximum Put open interest was placed at the 25,000 strike, followed by the 25,300 and 25,400 strikes. The maximum Call writing was observed at the 25,600 strike, followed by the 25,500 and 26,000 strikes, while the 25,300 strike saw the maximum Put writing, followed by the 25,400 and 25,450 strikes.

The above weekly options data also suggests that the Nifty 50 may trade in the 25,300–25,600 range in the near term, while the broader trading range remains at 25,000–26,000.

Bank Nifty

The Bank Nifty also had a choppy and rangebound session, closing 83 points down at 56,949 and forming a Doji-like candlestick pattern. The index remained well above the previous week’s low of 56,600, which is expected to act as support in the upcoming sessions. However, 57,500 is expected to be a hurdle on the higher side.

Analysts at Bajaj Broking expect the banking index to extend its consolidation in the 56,000–57,500 range in the coming sessions. “Only a move above 57,500 will open further upside towards the 58,200–58,500 levels in the coming weeks,” the analysts said.

The broader trend remains positive, and any dips should be viewed as buying opportunities, they advised.

Meanwhile, the India VIX—the fear gauge—remained strongly supportive for bulls despite a small uptick in Thursday’s session. It rose by 1.99 percent to 12.56 levels.