Trade Setup for July 30: Nifty bulls take small wins enroute to reclaiming 25,000 levels

Another important session beckons for the bulls on Wednesday, the penultimate day of July and the July F&O series as well. The lead up to this series finale has been anything but pleasant for the bulls and therefore, Tuesday’s gains will come as a welcome relief to the bulls, who endured three days of pain, having failed to not only cross 25,250 on the upside, but also hold to the 25,000 mark.For a better part of the session on Tuesday, which also happened be the monthly expiry of the Sensex contracts, the bears were still in control as the Nifty even slipped below the 24,600 mark, but Reliance Industries, ably supported by L&T, Bharti Airtel and HDFC Bank sparked a recovery in the second half. The index closed 220 points of the lows of the day, and above the mark of 24,800.
Better? Certainly. Out of the woods, definitely not.
It was a struggle for the bulls to cross 24,850 today and that will be the first line to cross in Wednesday’s trading session if the index moves higher. This will follow Monday’s high of 24,889 and last Friday’s high of 25,010.What also needs to change is the fact that the Nifty continues to make lower highs and lower lows on the charts, despite the recovery made on Tuesday.
The next three days will be the busiest in terms of global cues as Meta, Microsoft, Apple, Amazon report results, while the two-day Fed meet concludes and the world would be awaiting to hear from Jerome Powell as to whether or not the world’s largest central bank would eventually bite the bullet in September. Adding to that is the Q2 GDP data for the US, along with the non-farm payrolls on Friday. Above all, the August 1 tariff deadline also looms large.Not that our own earnings season is any dour. Wednesday’s session will first see a reaction from Larsen & Toubro and the company’s guidance. You’ll also have earnings reactions from Bank of India, NTPC, GMR Airports, Piramal Enterprises and others.

Wednesday is also an important session as three more IPOs will be opening for subscription, in addition to the three that are already open for bidding. Sri Lotus Developers, NSDL and M&B Engineering will all see their respective issues open for subscription on Wednesday, along with Aditya Infotech, Laxmi India and Shanti Gold, which are already open.

Mandar Bhojane of Choice Broking said that the Nifty sustaining above 24,800 will position the index to move higher towards 25,000 and 25,200 levels, which are the highs of last week. On the downside, 24,600 remains the key support and a break below that could trigger a move towards 24,200 – 24,160 levels.

The Nifty has formed a bullish engulfing pattern on the daily chart, indicating the possibility of a meaningful bullish reversal, Rupak De of LKP Securities said. He expects the Nifty to move towards 24,950 – 25,000 levels as there is also a positive divergence on the charts. Support on the downside is at 24,750.

The Nifty Bank was an underperformer on Tuesday, even as it ended with gains of over 100 points. The index continues to sustain above the 56,000 mark, a level it has not closed below since June 19.

“Going ahead the support zone of 55,800 – 55,700 will be crucial to watch. Holding above this band is essential to maintain the current short-term positive bias. On the flip side the resistance zone of 56,500 – 56,600 is expected to pose a significant challenge. A decisive and sustainable breakout above the 56,600 level could pave the way for an extended pullback rally with immediate upside targets at 57,000 followed by 57,500 in the near term,” Sudeep Shah of SBI Securities said.