Trade Setup for July 16: Nifty bulls stage a comeback courtesy IT, but sustaining it is the debate

The Indian equity market snapped its four-day losing streak on Tuesday, with the Nifty reclaiming the 25,200 mark. After opening on a positive note, the index gained momentum through the session and closed near the day’s high, rising 114 points to end at 25,196.The Nifty Smallcap 100 index closed at the highest level of the ongoing rally, which began in April this year.
Buoyed by cooling domestic inflation and broad-based buying, the market held on to gains. Broader market outperformance continued, with the Nifty Midcap index rising 1%, compared to a 0.5% gain each in the Sensex and the Nifty.
Reflecting this upbeat sentiment, all sectoral indices ended in the green, indicating a comprehensive buying spree. Auto, Healthcare, Pharma, and Consumer Durables were the standout gainers.On the stock-specific front, HCL Technologies was the top Nifty loser, falling over 3% after the company slashed its FY26 margin guidance. While some brokerages upgraded the stock, others downgraded it, anticipating near-term pressure.

June CPI eased to a 77-month low of 2.1%, boosting investor sentiment and aiding the bulls’ comeback during the session.

Looking ahead to Wednesday, the market’s focus will shift to earnings reports from Tech Mahindra, L&T Technology Services, ITC Hotels, Ixigo, among others.Investors will also be watching Trent, after athleisure brand Lululemon announced plans to open its first store in India in the second half of 2026. The brand has partnered with Tata CLiQ, which will also support its local e-commerce presence on Tata CLiQ Luxury and Tata CLiQ Fashion.

According to Nagaraj Shetti of HDFC Securities, Tuesday’s bounce-back could provide momentum for a further bullish move. “A sustainable move above the immediate resistance of 25,350 could open up more upside in the near term. Immediate support is placed at 25,000.”

Rupak De of LKP Securities said the Nifty recovered as it found support around 25,000 in the previous session. However, it faced initial resistance at the 21-EMA, near 25,250.

“A decisive move above 25,260 could trigger a rally towards 25,400 and beyond. On the flip side, if the index fails to sustain above 25,260, it could slip back towards the support zone of 25,000 and 24,920–24,900,” De said.

Vikram Kasat of PL Capital added that Nifty’s immediate support remains firm at 25,000, with resistance around 25,325. Investors are also awaiting the upcoming US CPI data for global cues.

Nandish Shah of HDFC Securities said that Nifty found support at its 50-day SMA and bounced back, raising hopes of a sustained recovery. “Given the evident strength in broader markets, the current rebound is likely to sustain. Longs should be protected with a stop loss at 25,000. On the higher side, 25,331 could act as a short-term resistance level,” Shah said.