Markets drifted lower during the week and lost over a per cent, primarily pressured by the lingering uncertainty surrounding global tariffs and a disappointing start to the earnings season.
While the tone remained largely stable in the first three sessions, profit booking in the final sessions dragged the indices lower. Eventually, both the Nifty and Sensex settled near their weekly lows at 25,149.85 and 82,500.47, respectively.
Nifty slipped below its crucial short-term moving average—the 20-day EMA—and has entered the previous consolidation range of 24,500–25,200. This breakdown has disrupted the positive bias, potentially leading to extended consolidation.
“On the downside, the 24,500–24,900 zone will act as a key support area, while on the upside, 25,550 remains a critical hurdle in the event of a rebound, with major resistance at 25,750,” said Ajit Mishra – SVP, Research at Religare Broking.
Here are the key factors that will likely impact the D-Street action next week:
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1. Q1 earnings: Looking ahead, the earnings season will be in full focus. A packed calendar includes results from HCL Tech, Tech Mahindra, Axis Bank, ICICI Bank, Wipro, JSW Steel, L&T Finance, and HDFC Bank, among others.
2. Domestic data: On the macroeconomic front, participants will closely track the WPI and CPI inflation data scheduled for July 14 for further cues on the economy.
3. Global events: Globally, uncertainty around potential tariff moves by the Trump administration continues to weigh on sentiment, but optimism has risen around an early trade deal between US-India.
4. IPO action: A busy IPO calendar with several prominent listings like Crizan Ltd and Glen Industries, and many more in the pipeline is likely to keep the Indian market busy.
5. FII activity: The trend in foreign institutional investor (FII) flows will also be closely monitored. On Friday, foreign institutional investors (FIIs) were net sellers at Rs 5,155.68 crore, while the domestic institutional investors (DIIs) were net buyers at Rs 3,482.95 crore.
6. Technical factors: The Nifty continues to remain weak as the index slipped below the previous swing low on the hourly chart. Additionally, it has fallen below the 21 EMA on the daily timeframe. Momentum also remains weak in the short term, with the RSI in a negative crossover. However, after the recent decline, the index has approached the support of the 200-hourly moving average.
“A move above 25,150-25,160 in the initial trading hour could trigger a rally towards 25,250 and 25,400. On the downside, support is placed at 25,090 and 24,900,” said Rupak De, Senior Technical Analyst at LKP Securities.
7. Rupee action: Rupee traded weak by 0.11% at 85.73 as capital market weakness, along with higher Gold and Silver prices and weak global cues, weighed on sentiment. The rise in tariffs from the US on Brazil and Canada has added uncertainty, and markets will remain cautious until constructive trade talks emerge.
Additionally, the dollar index has shown recovery, rising from 96.50 to 97.75, which has added pressure on emerging market currencies. Rupee is expected to trade in a range of 85.25 to 86.20.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)