Will Nifty end July above or below 25,000? These 3 key factors to set trend

Mixed Q1 results, the US tariff deadline and significant short bets by FIIs in Nifty futures likely to weigh on the market direction this week; here are the key levels to track.

With four consecutive weekly losses, the NSE Nifty 50 index has now registered its longest weekly losing streak since October 2024. Last week, the Nifty ended with a loss of 131 points or 0.5 per cent at 24,837. In the process, the NSE benchmark index has shed 801 points or 3.1 per cent in the last four straight weeks.  On similar lines, the BSE benchmark - Sensex ended the week 294 points lower at 81,463; and has plunged over 3 per cent or 2,596 points in the last four weeks.  This week, the equity market could see heightened trading activity with the US trade deal deadline approaching (August 1), monthly futures & options expiry (July 31) and a higher number of companies reporting Q1 earnings. 

F&O Cues

  In the 20-odd trading sessions thus far in July, foreign institutional investors (FIIs) have been net sellers in Nifty futures on 18 of these trading days. FIIs open interest in Nifty futures has increased by 66.3 per cent during this period, thus implying build-up of significant short positions in July F&O series.  Further, the long-short ratio as per the NSE derivatives segment, shows that ratio stands at 0.17 - the lowest point since February 2025. This ratio also implies that FIIs hold more than 5 short positions for every long bet in Nifty futures as of Friday, July 25.  ALSO READ | Near-term bias for Nifty turns negative, can dip 3% from here; hint charts  "The FIIs are short and will continue to remain short till the time they don't see clarity on tariff and positive outcome of results and probable upgrades and capex plans from Corporate India", said Mitesh Dalal, Head of Broking at Sanctum Wealth.  The Q1 results so far have been a mixed bag. The earnings growth is led by the cost saving more than the sales volume growth. A lot is dependent on the tariff settlement with the US and the pick up in consumption during the festive season, Mitesh Dalal explained.  The analyst expects Nifty to settle within the 24,800 - 25,200 range for the July series, provided no geopolitical news flow affects the same.  Meanwhile, Kunal Kamble, Sr. Technical Research Analyst at Bonanza Portfolio highlights that historically, when FIIs short positions cross 84 per cent, the market tends to enter an oversold zone, often followed by short covering-led bounce backs.  ALSO READ | Looking to buy in falling market? NMDC, Godrej Agro, 2 others may gain 19%  Considering the extreme FIIs short positions and supportive option data, the Nifty appears to be in a short-term oversold territory. As we approach expiry, a bounce driven by short covering cannot be ruled out, said Kunal Kamble. 

Technical Outlook on Nifty, Sensex

NSE Nifty

Last Close: 24,837  Likely Target: 24,200  Downside Risk: 2.5%  Support: 24,700; 24,500; 24,337  Resistance: 25,056; 25,259; 25,460  After breaking below its 20-Day Moving Average (20-DMA) earlier this month, the Nifty 50 index is now seen quoting below the 50-DMA after a gap of 4 months, which stand at 25,259 and 25,056, respectively. 

 

  At present levels, Nifty faces another 500-point downside risk, with key support seen around its 20-Week Moving Average (20-WMA), which stands at 24,337 levels followed by the 50-WMA around 24,200-odd levels. Interim support for the Nifty can be anticipated around 2,4700 and 24,500 levels.  However, select key momentum oscillators are seen quoting in oversold territory thus some consolidation or a possible pullback in the coming trading sessions. The Nifty will need to quote consistently above 24,850 levels, to offer hopes of a likely bounce ahead.  Having said that, the short-term bias for the Nifty is likely to remain negative as long as the index holds below 25,460 levels, shows the daily chart. 

BSE Sensex

Last Close: 81,463  Likely Target: 78,765  Downside Risk: 3.3%  Support: 81,300; 80,600  Resistance: 82,175; 82,720  Technically, the BSE Sensex is yet to indicate a sell signal on the monthly Fibonacci chart, as the BSE benchmark index continues to quote above the 81,300 levels. As long as this support is respected, a sharp vertical recovery beyond 83,600 levels cannot be ruled out. Intermediate hurdles are seen placed at 82,175 and 82,720 levels.  On the other hand, in case, the support at 81,300 gets violated the Sensex can drop towards 80,600-odd levels. Break and sustained trade below the same can accentuate the fall towards 78,765 levels.