Indian equity markets are showing cautious optimism with Nifty eyeing the 24,300-25,000 zone amid ongoing volatility. According to latest analyst reports, the index is expected to extend gains towards this target if it breaks above key resistance levels, while advising traders to remain selective amid continued market uncertainty. The positive outlook comes after India's benchmark indices posted gains for a third straight week, supported by easing crude oil prices, though they surrendered most of their intraday gains ahead of the long weekend. Technical analysts remain cautiously bullish on the Nifty this week, with the index having posted gains for three consecutive weeks, providing a foundation for continued upward momentum.
The banking sector is anticipated to lead the next market rally after a period of underperformance, with Bank Nifty targeting 61,000 in the coming days. According to Srivastava's analysis reported by ET Now, the sector is entering a phase of catch-up after lagging the broader market for the past couple of years. Srivastava identifies banking as "one of the top-performing sectors over the coming year," especially after underperforming for the past one or two years. He believes the sector is witnessing a "complete turnaround and a catch-up in performance" in the next leg of market growth. However, the sector faces unprecedented pressure from foreign institutional investors who are aggressively selling Indian bank stocks. Foreign investors have pulled out ₹126,089 crore in calendar year 2026 so far, translating to an average daily selloff of over ₹1,146 crore across just 110 trading days. This massive outflow, nearly half of all FII selling, is driven by rising US bond yields, a stronger dollar, and geopolitical risks, with financials accounting for 44% of all FII selling across all sectors.
Information technology stocks emerged as the biggest drag on market performance, with Nifty IT declining over 2% during recent sessions. The sector faced significant pressure as global AI concerns intensified, with Alphabet plunging 5% following the exit of two high-profile researchers to rivals. Other major IT giants including Meta, Amazon, and Microsoft ended 3-5% lower. In the domestic market, Infosys was among the top laggards, falling over 3% while Tata Consultancy Services and Wipro also declined nearly 3%. According to Nirmal Bang analysts, artificial intelligence software is expected to compress the revenue of domestic IT players, with the sector facing AI-related pressure for the next six to seven months.
While the Nifty Defence Index witnessed sharp selling pressure during the session, Srivastava views this as a temporary pullback rather than a reversal of the broader trend. As reported by ET Now, the defence index had been outperforming the broader market, rising for nearly 78 consecutive days, before experiencing a two-day pullback. Srivastava views this as "just a pause before the uptrend resumes" and anticipates the index heading toward 10,700-10,800 in the coming weeks. He recommends a "buy on dips" strategy for the sector and has an active recommendation on Garden Reach Shipbuilders & Engineers (GRSE) for clients. The sector is expected to resume its uptrend with targets of 10,700-10,800 in the coming weeks, with investors advised to use short-term corrections as buying opportunities.
With markets trading in a broad range amid sharp volatility, analysts recommend selective trading approaches and specific strategies. For the July 7 expiry, a moderately bullish Call Spread strategy is recommended: buy one lot of the 24,100 Call option at a premium of ₹195–175 and simultaneously sell one lot of the 24,400 Call option at a premium of ₹75–85. The strategy has a break-even point at 24,220, with a maximum potential loss of ₹7,800 and a maximum profit of ₹11,700. From a sectoral perspective, select private banks, financials, pharma, healthcare, tourism and auto stocks are expected to perform well, while Nifty IT, CPSE, PSE and metals are expected to remain under pressure and continue their underperformance in the near term.
