NIFTY OUTLOOK FOR 25 JUL 2024

Overall Market Performance: On July 24, 2024, Indian benchmark indices ended lower for the fourth consecutive session. The Sensex dropped by 280 points, closing at 80,148. The Nifty declined by 65 points, or 0.27%, settling at 24,413. The market displayed volatility, with Nifty forming a small negative candle on the daily chart, indicating a high wave type candle pattern after a recent decline from new highs.

Technical Analysis:

• The Nifty failed to hold the 10-day EMA and is currently testing the support at the 20-day EMA around 24,270 levels. A breakdown below this level could signal further weakness, potentially bringing the index to 24,100 or lower.
• A bullish hammer and high wave pattern formed over the last two sessions suggest a potential halt in the downward trend. A decisive move above 24,580 could indicate a near-term bottom reversal.
• The daily momentum indicator shows a sell signal, suggesting selling on rises around the resistance zone of 24,500 – 24,550. The short-term trend remains weak, with potential downside targets between 24,200 and 24,000.

Sectoral Performance:

• Gainers: Sectors like healthcare, oil & gas, media, telecom, and power showed gains between 1-2%. The broader indices outperformed, with the BSE Midcap index rising 0.7% and the Smallcap index gaining 2%.
• Losers: The FMCG and banking sectors declined by 0.5-1%. Notable underperformers in the Nifty were Bajaj Finserv, Britannia Industries, Bajaj Finance, Tata Consumer, and Axis Bank.

Market Breadth: The market breadth was positive, with 2,474 shares advancing, 927 shares declining, and 85 shares remaining unchanged.

Key Takeaways:

• The market continues to experience consolidation and volatility. Despite recent declines, the broader market segments, particularly mid and small caps, showed resilience.
• Key support for Nifty lies at 24,200, with immediate resistance at 24,560. A decisive break below 24,200 could trigger further selling pressure, while a move above 24,580 could signal a trend reversal.
• Investors are advised to maintain a cautious stance and focus on index majors. Monitoring position sizes and sector-specific performance, particularly in the context of banking and FMCG, is recommended.

Outlook: The short-term outlook for Nifty remains bearish unless it sustains above the key resistance levels. The formation of bullish patterns suggests the potential for a temporary halt in the downtrend. Traders should consider selling on rises and buying on dips within the defined support and resistance zones.