Nifty ends Above 25,400, Sensex Up Over 190 points; Why the Indian Stock Market WasTrading a Narrow Range?

The Indian stock market closed with small gains on Friday, July 4, as buying picked up in the second half of the day. However, the market stayed within a narrow range, as investors waited for updates on the India-US trade deal ahead of the tariff deadline and Q1 2025 corporate earnings.

The Sensex rose by 193.42 points, or 0.23%, to close at 83,432.89, while the Nifty 50 went up by 55.70 points, or 0.22%, to settle at 25,461. Despite Friday's rise, both indices fell over 0.60% for the week, ending their two-week winning streak.

Top Gainers And Losers:

Top Nifty gainers were Bajaj Finance, Dr Reddy, Infosys, Hindustan Uniliver, ICICI Bank among others. While, Trent, Tata Steel, Eicher Motors, Indusind Bank, Maruti and SBI Life were the top losers of the day with Trent falling over 11%.

Most sectoral indices ended in the green, except for Nifty Auto that fell by 0.17% and Metal down by 053%. The best performers included Nifty Oil & Gas, Realty, Pharma, and IT, all of which saw strong buying interest rising around 1%.

Despite a positive close, overall market sentiment stayed muted. Trading volumes on the NSE cash market were down 8% from the previous session, signaling continued caution among investors.

On a weekly basis, both the Sensex and Nifty fell by 0.7%, snapping their two-week winning streak. In contrast, the midcap index outperformed, gaining nearly 1%.

Why Is The Indian Stock Market Trading In A Narrow Range?

The Indian stock market has been moving in a limited range due to a few key reasons. First, there is uncertainty surrounding the India-US trade deal. Investors are waiting for more clarity, especially as reports hint at possible concessions like allowing imports of certain US genetically modified farm products. However, the lack of a clear agreement is making investors cautious.

Second, the upcoming Q1 results for 2025 are keeping market participants on edge. Many are waiting to see if companies report strong earnings and offer positive outlooks, which could drive the market higher.

And, foreign investors have started pulling out money from Indian equities. So far in July, foreign portfolio investors (FPIs) have sold stocks worth ₹5,013 crore, adding to the pressure on the market and limiting upward movement.

"The Indian market is experiencing a pause as investors adopt a wait-and-watch strategy ahead of the impending US tariff deadline with mixed global cues. Ongoing FII outflows reflect a risk-off approach, while DII inflows are offering partial support.

Following the recent rally, main indices are hovering near peak valuation levels, limiting further upside, which is highly dependent on Q1 earnings and details of the trade deal. In the mid- and small-cap space, the market has shifted to being more stock-specific following the recent recovery," said Vinod Nair, head of research, Geojit Investments.

Key Stock Highlights:

• Trent plunged over 11%, marking its biggest single-day drop in three months after a weak Q1 update.
• IGL rose nearly 3% as city gas stocks gained following new natural gas tariff reforms by PNGRB.
• HAL and other defence companies moved higher, with HAL up more than 1%, after DAC approved new indigenous defence acquisitions.
• Angel One dropped 6% due to a sharp decline in client market share in June.
• Bosch gained 4% as reports surfaced about a potential merger with its unlisted subsidiaries.
• Pharma stocks rallied, tracking positive news on US tariff changes, pushing the Nifty Pharma index up nearly 1%.
• Paras Defence jumped 10% after announcing a supply agreement with French firm CERBAIR.

Technical Outlook For Nifty:

"Nifty has formed bullish "Hammer" candlestick pattern after finding support on the upward sloping trend line, adjoining recent swing highs on the daily chart. This indicates throwback fall followed by the resumption of an uptrend in the Nifty. Today's low of 25331 becomes the new support for the Nifty. On the higher side, a band of 25600-25670 could offer resistance," said Nandish Shah - Deputy Vice President, HDFC Securities.

Staying on the similar lines Bajaj Broking said, "Nifty formed a small bearish candle on the weekly chart, suggesting the market is in a consolidation phase after a strong recent rally. The index is expected to continue trading in the 25,200-25,700 range with a slight positive bias."

"The overall trend remains strong, supported by broad participation across sectors. Key support is seen around 25,200-25,000, near the 20-day moving average. As long as Nifty stays above this level, any dip can be seen as a good buying opportunity," Bajaj Broking added.

Rupee VS Dollar:

The Indian rupee closed 8 paise lower against the US dollar at 85.40 on Friday, compared to 85.32 on Thursday.

For the day and the week, the rupee slipped slightly, ending at 85.3925, down 0.1%. Its movement was limited by strong U.S. jobs data and regular dollar buying by importers. Traders are closely watching the outcome of U.S.-India trade talks, as a deal could help the rupee strengthen past the 85.35-85.40 level. However, rising forex reserves and the RBI's reduced forward book continue to support the rupee's stability.

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