D-Street Ahead: How will Indian stock market move in holiday-shortened week? Key technical calls for Nifty, Sensex

D-Street Ahead: The Indian stock market settled the week on a subdued note, ending with modest losses amid heightened volatility. The market was largely dragged by escalating global trade tensions following Trump's imposing steep tariffs on its key trading partners, including India and China.

Domestic equity benchmarks Sensex and Nifty 50 dropped for the second week due to economic uncertainty triggered by Donald Trump's tariffs. However, the US suspended additional tariffs on India for 90 days until July 9 this year, which helped the market stage a strong recovery and trim some losses.

Indian stock market's performance last week

The holiday-shortened week began on a weak footing, with a sharp gap-down triggered by global concerns. However, sentiment improved significantly in the subsequent sessions, helping the Nifty 50 and Sensex trim losses and settle at 22,828.50 and 75,157.26, respectively, down nearly 0.5 per cent.

Defying a bearish trend in world markets, the 30-share BSE benchmark Sensex jumped 1,310.11 points or 1.77 per cent to settle at 75,157.26 on Friday. During the day, it soared 1,620.18 points or 2.19 per cent to 75,467.33. The NSE Nifty surged 429.40 points or 1.92 per cent to 22,828.55. In intra-day trade, the benchmark rallied 524.75 points or 2.34 per cent to 22,923.90.

On the weekly front, the BSE benchmark declined 207.43 points or 0.27 per cent. Nifty dipped 75.9 points or 0.33 per cent. The broader midcaps fell 0.3 per cent, logging their third week of losses, while small caps rose 0.1 per cent. Heavyweight financials and information technology shares declined 0.9 per cent and 2.3 per cent, respectively, posting their second straight weekly declines.

The realty sector emerged as the top laggard among sectoral indices, while FMCG stocks outperformed. Realty, metal, and IT stocks were the major laggards during the week. In contrast, select stocks from the FMCG and energy spaces managed to buck the trend and ended in the green. The broader indices also mirrored the benchmark’s performance, closing flat to marginally lower amid intense intra-week swings.

Sensex, Nifty, and Bank Nifty technical levels to watch

Technically, analysts noted the NSE Nifty 50 benchmark gauge witnessed a smart rebound after breaching its March lows and is now testing its 20-day exponential moving average (DEMA) around the 22,900 mark.

“A sustained close above this level could open the door for a further rally towards 23,400, where the 100 and 200 DEMA converge. A major hurdle remains at 23,800. On the downside, immediate support lies at 22,300; a break below this could lead to a retest of the recent swing low near 21,700.”

"Bank Nifty continues to show relative strength, reclaiming key moving averages after a brief dip. Sustaining above the 50,000 level would keep the bullish momentum intact, with potential upside targets at 52,000 and eventually 53,500," said Ajit Mishra – SVP of Research, Religare Broking.

“A strong marubozu candle formed on the weekly chart indicates lower buying interest. However, India VIX surged 46 per cent this week to hover near 20, reflecting continued high volatility. The index is trading below its crucial 21-day and 55-day EMAs, hinting a weak trend,” said Puneet Singhania, Director at Master Trust Group. “Key supports lie at 22,500 and 22,200, while resistance is seen near 23,050,” added Singhania.

According to Singhania, Bank Nifty rebounded sharply after a weak start, supported by the Reserve Bank of India's 25 basis point rate cut to six per cent and a shift to an accommodative policy stance, which supports the outlook for banking stocks. Despite the broader market weakness, the index shows relative strength.

"It trades above the crucial 21-day and 55-day exponential moving averages, indicating short-term support. ”Key support is now placed at 50,400, which aligns with the 21-day EMA; a breach below this could lead to a decline toward 49,800. On the upside, the psychological resistance of 52,000 remains a major hurdle. Until this level is crossed decisively, further upside momentum is unlikely," he added.
 

D-Street trading strategy for next week

"Given the prevailing uncertainty and sharp swings, traders and investors are advised to adopt a hedged approach until we see a cool-off in the volatility index, India VIX. Selective stock-picking opportunities continue emerging, particularly in banking and finance. Investors may also consider quality names from other sectors on dips," said Ajit Mishra of Religare Broking.

According to Puneet Singhania, Nifty remains a sell-on-rise market in this uncertain environment. “Traders should stay cautious and avoid aggressive long positions until volatility subsides and technical strength is confirmed.” For Bank Nifty, the overall view remains cautious, and traders are advised to stay alert with key levels in focus.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.