July 21, 2025

Under Pressure: Five Factors Weighing on Nifty 50 This Week

The Nifty 50 enters the week of July 21–25, 2025, under pressure after closing at 24,968.40 on July 18, 2025, down 143.05 points or 0.57% for the day and 1.14% for the week, as per web sources. A broad-based sell-off, led by heavyweights like HDFC Bank and Reliance Industries, combined with global trade frictions and mixed earnings, sets a cautious tone. Supports at 24,783 and 24,473 are critical, while resistance looms at 25,255–25,669. Below is a detailed analysis of the Nifty 50 for the upcoming week, focusing on the five key factors influencing its trajectory.

1. Last Week Market Analysis (July 14–18, 2025)

The Nifty 50 experienced a bearish week, falling for the third consecutive week, with financials and IT sectors leading the decline. The index closed at 24,968.40 on July 18, reflecting a cumulative weekly loss of 1.14%.

FII and DII Activity: Foreign Institutional Investors (FIIs) sold equities worth ₹5,104 crore on July 11, while Domestic Institutional Investors (DIIs) bought ₹3,558 crore, providing some support.

Index Performance: The index breached key supports, including the 20-day EMA (24,900), and closed below the June Point of Control (POC) at 25,109, signaling bearish momentum.

Market Sentiment: A risk-off sentiment prevailed, with 39 of 50 constituents declining and only 11 advancing. The NSE advance-decline ratio was balanced at 1:1, but broader indices like BSE Midcap and Smallcap outperformed, each rising 0.5%.

Technical Indicators: The Relative Strength Index (RSI) fell below 50, indicating bearish momentum, while a Doji candle on the daily chart signaled indecision. A breakdown below 25,200 confirmed selling pressure.

2. Key Index Performance

Top Performing Sectors:

FMCG: Gained 2%, driven by defensive stocks like Hindustan Unilever (HUL, +0.46%) and SBI Life Insurance (+0.14%), supported by stable demand amid inflation concerns.

Pharma: Up 0.7%, with Sun Pharma (+0.71%) benefiting from export resilience and domestic demand.

Realty: Rose 1.17% on July 17, reflecting selective buying despite broader market weakness.

Underperforming Sectors:

IT: Fell 4%, the biggest laggard, with TCS (-3.47%), Wipro (-2.62%), and Tech Mahindra declining due to weak Q1 earnings and global demand slowdowns.

Auto: Down 1%, with Mahindra & Mahindra (M&M, -2.92%), Hero MotoCorp (-2.74%), and Bajaj Auto (-2.54%) hit by lower discretionary spending and export disruptions.

Banking/Financials: The Nifty Bank index fell 0.35% to 56,754.7, dragged by HDFC Bank (-1.16%), Canara Bank (-0.64%), and Bank of Baroda (-0.79%). Select banks like IndusInd Bank (+0.64%) and Axis Bank (+0.63%) outperformed.

3. Upcoming Week Outlook (July 21–25, 2025)

The Nifty 50 is expected to remain volatile with a neutral-to-bearish bias, driven by ongoing Q1 FY26 earnings, global trade uncertainties, and domestic economic indicators. Positive earnings from index heavyweights like Reliance Industries, HDFC Bank, and ICICI Bank could provide upside, but global and technical headwinds suggest caution.

Market Sentiment: Indicate bearish sentiment, with warnings of a potential “Black Crow” pattern and a double-top breakdown if the index breaches 24,500. However, strong DII buying ($328 million) could provide support.

Cautious Sentiment: Experts recommend a “wait and watch” approach due to elevated volatility and uncertainty around US-India trade talks.

Earnings Focus: Results from Reliance Industries (post-market July 18), HDFC Bank, and ICICI Bank (July 19) will drive stock-specific momentum. Other key earnings include LTIMindtree, CEAT, Sterling & Wilson, Jio Financial Services, JSW Steel, L&T Finance, Bandhan Bank, Hindustan Zinc, IndiaMART, and Indian Overseas Bank.

Technical Outlook: The index may consolidate unless it breaks above 25,255–25,669 resistance or falls below 24,783 support. A breach below 24,473 could trigger a sharper decline toward 24,000.

4. Expected Index Levels

Bearish Case: Weak earnings or escalating trade tensions could drive the index toward 24,500 or lower

Resistance Levels: 25,255 (immediate), 25,669 (strong). A breakout above 25,669 could target 25,800–26,000.

Support Levels: 24,900 (immediate), 24,783–24,473 (key demand zone). A breach below 24,473 could lead to 24,000.

Expected Trading Range: 24,900–25,500, with volatility driven by earnings and global cues.

Potential Scenarios:

Bullish Case: Strong earnings from Reliance, HDFC Bank, and ICICI Bank, combined with positive trade talk progress, could push the index toward 25,255–25,669.

Bearish Case: Weak earnings or escalating trade tensions could drive the index toward 24,500 or lower.

5. Key Events and Drivers

a. Economic Indicators

• Inflation: Projected at 4.8% for FY26 due to food price volatility, keeping the RBI in a neutral stance with no imminent rate cuts, impacting consumer-driven sectors.
• Rupee Movement: At 86.15 per USD, rupee depreciation raises import costs, particularly for oil & gas and consumer durables.
• GST Collections: May 2025 growth slowed to 6.2% year-on-year, signaling economic moderation and potentially dampening investor confidence.
• India VIX: Fell to a 15-month low, suggesting reduced volatility, but a spike could signal uncertainty if earnings disappoint.

b. Global Events

• US-India Trade Negotiations: The 10% US tariff on BRICS nations, effective August 1, threatens exports in IT, auto, and textiles. Unresolved agriculture and steel issues fuel uncertainty, potentially driving FII outflows.
• US Federal Reserve Policy: Delayed rate cuts into late 2025, with US inflation at 3.2% and a dollar index above 105, spur capital outflows from emerging markets ($800 million from India in July).
• Global Markets: Positive US futures (post-NFP and US-Vietnam trade deal) contrast with mixed Asian markets and lagging Japanese indices, creating a mixed global backdrop.

c. Local Events

Earnings Season: Key Q1 results from Reliance Industries, HDFC Bank, ICICI Bank, and others (listed above) will drive market direction.

Union Budget 2025: Pre-budget anticipation (February 2025) influences sentiment, particularly for infrastructure and banking sectors.

IPO Activity: 10 IPOs and 3 listings during the week may divert liquidity from the secondary market, capping Nifty upside.

Conclusion

The Nifty 50 faces a volatile week of July 21–25, 2025, with a neutral-to-bearish bias driven by US-BRICS trade tensions, mixed Q1 earnings, and global volatility. The index is likely to trade between 24,900 and 25,500, with supports at 24,783–24,473 and resistance at 25,255–25,669. Strong earnings from Reliance Industries, HDFC Bank, and ICICI Bank could spark a recovery toward 25,255, while weak results or escalating trade frictions may push it toward 24,500. Investors should focus on resilient sectors like FMCG and pharma, remain cautious in IT and auto, and monitor earnings, trade talks, and technical levels closely. India’s long-term growth story, bolstered by supply chain diversification and infrastructure capex, remains intact, but short-term caution is warranted.