ICICI Securities' Dharmesh Shah expects Nifty to break above 24,600 and move towards 25,100-25,500 in the coming weeks, supported by improving market breadth, easing FII outflows and sector rotation. According to Shah, the index has established a higher base after reclaiming its 200-day EMA and is hovering near the breakout zone of a four-month consolidation range around 24,600. The technical head notes that Nifty started the week with a positive gap up and oscillated within a narrow ~340 points range throughout the week, resulting in a 'Doji-like candle' indicating breather after recent sharp up move. Shah believes the formation of higher peak and trough along with ongoing sector rotation signifies broadening of rally that bodes well for eventual breakout from consolidation and open the door for milestone of 25,100 in coming weeks. Eventually, we expect Nifty to extend this move and head towards 25,500 in coming months, with the positive bias remaining intact as long as the key support threshold of 23,600 is held.
The Nifty Smallcap 250 index surged nearly 1% to hit a fresh 52-week high of 18,367, marking the highest level in nearly two years and approaching its September 2024 record of 18,688. The broader market rally was led by Ola Electric shares jumping over 7%, while Go Digit, PNB Housing Finance, RR Kabel and Bata India shares gained 5-6% to follow. The Nifty Smallcap 100 also hit a fresh record high near 19,820, with HFCL, Sapphire Foods, TBO Tek, Gabriel India and Engineers India shares rising more than 4% each to be among the top gainers. According to The Economic Times, analysts highlighted strong smallcap earnings and easing valuations as key drivers of the rally. Following the Midcap move, Nifty smallcap index reclaimed its all-time high after 20 Months, with the breakout from 8 years falling trend line on the ratio chart of Nifty smallcap / Nifty augurs well for acceleration of upward momentum.
According to ICICI Securities' Jay Thakkar, the Nifty Oil & Gas index, led by Reliance Industries, contributed significantly to the upside with Reliance gaining nearly 2%. Strong performances were also seen in Nifty Auto and Nifty FMCG indices, particularly driven by ITC and Nestlé India. The Nifty IT index rebounded strongly, recovering nearly 22% from its 52-week lows and ending the week with gains of 2.73%. Nifty Metals witnessed a strong recovery as the US Dollar Index retreated from recent highs and slipped below the 100 mark. The Nifty PSU Bank index made a positive contribution, supported primarily by State Bank of India's results and the RBI's decision to keep interest rates unchanged. Thakkar noted that market breadth remained healthy across sectors, though weakness in Nifty Private Bank stocks restricted the benchmark index's gains, preventing it from sustaining levels above 24,600.
Bank Nifty is likely to trade within the 57,300-58,300 range in the near term, with fresh call writing across 57,800-58,600 highlighting a strong resistance zone around 58,300-58,600. According to James, nearly 50% of stock futures have witnessed short covering, indicating easing bearish sentiment at the stock level. However, around 70% of the near OTM call strikes in index constituents have seen fresh short additions, suggesting traders are capping upside. The Put-Call Volume Ratio has moved down from the previous peak of 1.15 to 1.04, indicating that bullish sentiment has cooled somewhat. Nifty VIX has fallen to its lowest level since February, suggesting that traders expect market swings to remain limited, pointing to a relatively calm market environment in the near term.
For the week, the Sensex gained 0.52 per cent to close at 78,499.17, while the Nifty advanced 0.77 per cent to settle at 24,570.65. According to latest reports, the broader market continued to outperform the benchmark indices, with the midcap and smallcap indices rising 0.81 per cent and 2.61 per cent, respectively, suggesting continued stock-specific buying interest. The 24,000 level has shifted to become a strong support base, while the 24,900–25,000 zone is expected to act as the immediate resistance zone, while 24,100–24,200 remains the key support area. Shah's constructive stance is based on over past three decades there have been 8 occasions where Nifty has remained below its 200 days EMA for at least four months, with subsequent moves after reclaiming delivering average returns of 12-19% over the next 3-6 months. After 13 months relentless FII's outflow, selling pressure is finally waning, with FII's turning into a net buyer worth ₹2,400 crore to kick start the August month.
Hindustan Aeronautics is recommended as a buy at ₹4,860–4,910 with a target of ₹5,370 and stop loss at ₹4,670, as the stock has witnessed a breakout from a 15-month range. Artemis Medicare is suggested at ₹307–317 with a target of ₹358 and stop loss at ₹284, after breaking out from a 15-month consolidation. Union Bank of India is recommended as a buy at ₹183 with target ₹191–196 and stop loss ₹175, after displaying strong price structure and healthy breakout from 13-week consolidation. Mahindra & Mahindra is suggested at ₹3,502 with target ₹3,650–3,700 and stop loss ₹3,350, having witnessed breakout from four-month consolidation. State Bank of India is recommended at ₹1,097.20 with target ₹1,135–1145 and stop loss ₹1,070, after registering decisive close above 20-week SMA. Amara Raja Energy & Mobility is suggested at ₹934 with target ₹968–980 and stop loss ₹900, having closed above 200-week SMA on robust volumes.
