Stock Market Trading Outlook July 21: Sensex, Nifty Flash Bearish Signs, Analysts Warn of 24,800 If Supports

Indian equity markets are expected to open on a cautious note on Monday, tracking weak global cues and mixed corporate earnings in the ongoing Q1 FY26 results season. Analysts expect the markets to consolidate further this week, as investors digest earnings reports and track global developments.

Sensex, Nifty Prediction for July 21

Technical indicators for the Nifty 50 suggest caution. The index closed at 24,968 on Friday, forming a bearish candle on the daily chart and extending its lower highs-lower lows pattern. It also traded near the lower band of the Bollinger Bands, accompanied by above-average volumes.

The Relative Strength Index (RSI) dropped to 43.07, and the MACD histogram continued to weaken, indicating a bearish bias. Key support levels based on pivot point analysis are 24,924, 24,871, and 24,785. On the upside, resistance is seen at 25,097, 25,150, and 25,236.

What Traders Expect From Market Today?

Options data further supports the cautious sentiment. The highest Call open interest is at the 25,200 strike, with 85.55 lakh contracts, making it a significant resistance zone. This is followed by the 25,100 strike (73.51 lakh contracts) and 25,500 strike (67.89 lakh contracts).

Heavy Call writing was observed at the 25,100, 25,000, and 25,200 strikes, indicating strong supply pressure around these levels. There was minimal Call unwinding in the 24,250-25,800 band, suggesting expectations of range-bound trading.

On the Put side, the 24,900 strike holds the highest open interest at 48.6 lakh contracts, followed by the 25,000 (46.6 lakh) and 24,500 (41.56 lakh) strikes. This indicates that 24,900 could serve as an immediate support.

Maximum Put writing was observed at the 24,900, 24,950, and 25,000 strikes. Conversely, Put unwinding was most visible at the 25,200, 25,150, and 25,100 strikes, confirming the ceiling around the 25,200 level.

Nifty Target Revised Upward Despite Near-Term Pressure

Brokerage firm PL Capital has revised its 12-month Nifty target to 26,889 from its earlier estimate of 25,521, citing undervaluation at current price-to-earnings (P/E) ratios. In a bull-case scenario, PL Capital projects the benchmark could surge to 28,957, while in a bear-case outcome, Nifty could slip to 24,821.

Sensex, Nifty Snapshot

The previous week was marked by volatility across the board. The Sensex lost 742 points, or 0.90%, to close at 81,757, while the Nifty slipped by 181 points or 0.72%, ending the week at 24,968. Despite the broader market decline, mid- and small-cap stocks outperformed. The Nifty Midcap 100 gained 462 points (0.79%) to settle at 59,104, and the Nifty Smallcap 100 rose by 196 points (1.05%) to end at 18,959.

Sectorally, Auto, PSU Banks, Pharma, FMCG, Metal, Realty, Media, Energy and Commodities indices ended in the green, indicating resilience in select areas. However, IT, Financial Services, and Private Banks saw declines, dragging the benchmark indices lower. These sectoral trends suggest that investors are selectively rotating into defensive and domestic-oriented segments, avoiding global and rate-sensitive sectors for now.

On the global front, investor sentiment remains shaky amid concerns over potential US tariff measures. However, optimism surrounding a possible finalisation of the India-US trade deal has helped cushion the impact to some extent.

Foreign institutional investors have remained net sellers in the cash segment but continue to invest in primary market issuances like qualified institutional placements (QIPs), suggesting they are selectively bullish on India's long-term prospects.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.