Stock Market Today: Will Nifty50 Break Key Support Or Bounce Back After Q1 Earnings?

As trading resumes on July 21, 2025, the Indian stock market enters a pivotal session, grappling with continued bearish pressure, crucial earnings releases, and persistent foreign investor outflows.

After the Sensex and Nifty closed lower on July 18, all eyes are now on heavyweight Q1FY26 results and macro developments to determine near-term direction.

Market Recap: Indices End Lower Amid Broad-Based Selling
Indian equity benchmarks concluded the week with a sharp decline. The BSE Sensex fell by 501.51 points, or 0.61%, to close at 81,757.73. Meanwhile, the NSE Nifty shed 143.05 points, or 0.57%, slipping below the psychological 25,000 level to settle at 24,968.40.

This marks the third consecutive week of losses for the indices, with technical patterns and institutional flows reinforcing a bearish undertone across the broader market.

 Weak Momentum Signals Caution Ahead
According to Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research (Equity) at SBI Securities, the Nifty’s weekly structure signals a continuation of weakness.
“The benchmark index Nifty ended in the red for the third consecutive week, reflecting sustained bearish sentiment. On the weekly chart, it has formed a bearish candle with a lower high and lower low’s structure — a classic indication of downward momentum,” Shah said.

He added that the Nifty faced repeated rejection at the 20-day EMA and is now trading decisively below it.

“The 50-day and 100-day EMAs have started to flatten, which points to a potential loss of medium-term momentum,” he noted. The Relative Strength Index (RSI) stands at 43—its lowest since April 2025—and remains below its 9-day average, both in decline, indicating weakening internal strength.

Crucial Levels to Watch for Nifty
Immediate Support Zone: 24,860–24,900 (confluence of 50-day EMA and 61.8% Fibonacci retracement of the previous upmove from 24,473 to 25,669)
Next Support Level: 24,700
Resistance Zone: 25,130–25,160

The index's move today could be heavily influenced by the Q1FY26 results of major companies such as Reliance Industries, HDFC Bank, and ICICI Bank. A positive surprise could trigger a short-term reversal, while a miss may exacerbate the current downtrend.

Bank Nifty: Breakdown Confirms Bearish Setup
The banking index has mirrored the Nifty’s weakness. “On the daily chart, Bank Nifty witnessed a breakdown from a Rising Wedge pattern and slipped below its 20-day EMA,” Shah explained.

The RSI for Bank Nifty also points to waning strength.
“Despite a mid-week pullback, the RSI couldn’t move past 60 and now trades at 45—its lowest since March 2025. This reinforces the bearish bias,” he added.

Key Levels for Bank Nifty
Support Zone: 55,950–55,850 (50-day EMA)
Critical Support: 55,300
Resistance Zone: 56,700–56,800 (20-day EMA)

FII Activity: Persistent Selling but Possible Turning Point
Foreign Institutional Investors (FIIs) have remained net sellers in July 2025, offloading equities worth nearly Rs 17,000 crore in the cash segment.

In the derivatives space, the FII long-short ratio has slipped to 15%, a significant low, indicating a buildup of short positions.

“This is the lowest ratio in recent times. Historically, when the long-short ratio dips below 15%, it often precedes a short-covering rally as the market starts to price in excessive pessimism,” Shah observed.

This suggests that while the current stance of FIIs is clearly bearish, the downside from current levels may be limited unless fresh negative triggers emerge.

Sectoral Outlook: Where Is Strength Rotating?
While several sectors remain under pressure, a few are showing signs of outperformance:
Likely Outperformers:
PSU Banks
Metals
Pharma
Nifty Financial Services
These sectors are displaying relative strength and improving momentum indicators.

Underperformers:
Information Technology (IT)
Defense
Capital Goods

“These sectors continue to struggle with weak price structures and bearish momentum setups,” Shah said.

Stocks to Watch Today
Technically strong stocks likely to extend gains include:
Dalmia Bharat
Godrej Properties
Bajaj Finance
Chennai Petro
Sumitomo Chemical

These stocks are supported by strong relative strength, bullish price patterns, and favorable momentum readings.

Read More - Reliance Share Price Target Raised To Rs 1,600 By Emkay Despite Q1 Miss

Macro Overhang: US-India Trade Tensions in Focus
In addition to domestic cues, investors should monitor the ongoing tariff-related discussions between India and the United States. Any resolution—or escalation—could directly impact key export-oriented sectors such as pharmaceuticals, IT services, and industrial goods.
 

Monday’s trading session holds significant weight for near-term market direction. With heavyweight earnings announcements, key support levels being tested, and institutional selling pressure at extremes, the market may either continue its downward trajectory or find room for a short-term bounce.

Disclaimer

The views expressed in this article are purely informational and Republic Media Network does not vouch for, promote or endorse any opinions stated by any third party. Stock market and Mutual Fund investments are subject to market risks and readers are advised to seek expert advice before investing in stocks, derivatives and Mutual Funds