Stock Market Today: Why Experts Believe The Nifty Rally Has Just Begun

Indian equity markets closed higher for the second straight session on Tuesday, July 23, buoyed by upbeat corporate earnings and improved macroeconomic sentiment. The BSE Sensex surged 539.83 points (0.66%) to settle at 82,726.64, while the NSE Nifty climbed 159 points (0.63%) to close at 25,219.90, marking its first close above the crucial 20-day EMA since July 11.
The technical indicators suggest a shift in market momentum, backed by strong global cues and expectations of a potential short squeeze amid high FPI short positions.

Technical Outlook: Nifty Targets 25,650 in the Short Term
Sudeep Shah, Vice President and Head of Technical and Derivative Research at SBI Securities, noted,
“On Wednesday, the benchmark Nifty index displayed a steady upward trajectory and concluded the session at 25,219.90 with a gain of 0.63%. For the first time since July 11, the index has successfully closed above its 20-day EMA.”

Shah emphasized that this decisive move above the short-term moving average indicates strengthening sentiment. The rally was led by heavyweight stocks such as ICICI Bank, HDFC Bank, and Bharti Airtel.

“Now, the Nifty is trading above both its short-term and long-term moving averages — a technically bullish signal that indicates strengthening momentum,” he added. 

Nifty - Key levels to watch today 
Shah pointed out that the 25,300–25,330 zone would serve as an immediate resistance. A breakout above 25,330 could trigger a sharp rally toward 25,500, followed by 25,650 in the near term. On the downside, 25,070–25,100 will offer immediate support.

Bank Nifty: Poised for Breakout
Shah also highlighted that Bank Nifty outperformed other indices, ending above the 57,200 level with a 0.80% gain.
“The zone of 57,400–57,500 will act as an immediate hurdle for the index, where a horizontal trendline is placed. Any sustainable move above 57,500 will lead to a sharp upside rally up to 58,100, followed by 58,600,” he said.

On the downside, the 20-day EMA zone of 56,800–56,850 will act as a key support area.

Sensex Levels to Watch
Similar bullish momentum was observed in the Sensex, which also closed above its 20-day EMA for the first time in nearly two weeks.

“Going ahead, the 82,950–83,000 range will act as an immediate hurdle. While on the downside, the 82,300–82,400 zone will serve as crucial support,” Shah noted.

Sectoral Outlook: Financials, Auto, and Metals in Focus
Sectors expected to outperform in the short term, according to Shah, include:
Nifty Private Bank
Financial Services
Automobile
Capital Market
Consumer Durable
Metals

Conversely, underperformance is likely from:
Oil & Gas
Realty
Information Technology (IT)
FII/DII Activity Signals Divergence

Foreign Institutional Investors (FIIs) continued their selling streak, offloading Rs 4,209.11 crore in the cash segment. On the other hand, Domestic Institutional Investors (DIIs) remained net buyers, purchasing stocks worth Rs 4,358.52 crore, indicating continued domestic confidence in Indian equities.

Global Cues: US-Japan Trade Deal Fuels Risk-On Sentiment
Ajay Bagga, a seasoned market expert, provided key insights into global macroeconomic drivers supporting Indian equities.
“The Japan-US trade deal led to a Risk-On sentiment dominating global markets on Wednesday. By the end of the day, Asian, European, and US stocks had all risen on the reduction in uncertainty on the trade front,” Bagga said.

Reports from Financial Times and Bloomberg indicated progress on a potential 15% tariff deal between the EU and the US, expected to be finalized before the August 1 deadline.
“From South Korea to ASEAN countries, anticipation of finalized trade deals is high. India will formalize its FTA with the UK today, which should be supportive of markets,” he added.
Bagga also emphasized the importance of a potential US-India trade deal. A delegation from the US is expected in mid-August, and any breakthrough could result in a sharp short squeeze, given the 85% net short positions held by FPIs.

Wall Street Rally Lifts Global Sentiment
US markets soared overnight, with the S&P 500 climbing 0.78% to 6,358.91, marking its 12th record close of the year. The Dow Jones Industrial Average added 507.85 points (1.14%), while the Nasdaq Composite breached the 21,000 mark for the first time.

Mega-cap tech stocks led the charge:
Alphabet (Google) rose 2% after beating Q2 earnings expectations.
Tesla slipped 4% following a second consecutive quarter of declining auto revenue.
IBM shares fell 5% on disappointing software revenues.

Shah observed, “All three major US indices ended sharply higher. The #Nasdaq and S&P 500 closed at fresh record highs. As the S&P 500 is trading at an all-time high, all moving averages and momentum indicators suggest strong bullish momentum.”

He predicted the S&P 500 could test the 6,420 level, with support at 6,300–6,320.

Commodity and Currency Watch
Brent Crude
Crude prices have been fluctuating within the $70.07–$67.23 range for eight sessions.
Shah noted that the broader trend remains sideways, with daily RSI oscillating between 40–60.
Crucial resistance lies at the 200-day EMA zone of $70.50–71, while $67.30–67.50 is immediate support.

US Dollar Index (DXY)
The Dollar Index ended lower for the fourth straight session, trading below its 20-day EMA.
Resistance is seen at 97.50–97.70, while 97.00–96.80 remains the support zone.

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Bullish Bias Remains, All Eyes on Global Trade Deals
The combination of positive domestic technical indicators, global trade optimism, and strong US equity performance points toward a continued upward bias in Indian markets.
While resistance zones are closely watched around 25,330 for the Nifty and 83,000 for the Sensex, a breakout above these levels could ignite further upside. Sectors like banking, auto, and metals are likely to lead the charge, while global developments—particularly a potential US-India trade deal—could be the X-factor that triggers a market-wide rally.

 

Disclaimer

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