NIFTY Index Chart Analysis

The benchmark index Nifty 50 continued to decline for the third consecutive week, as selling pressure in Large-Cap stocks intensified. IT and Financials played spoilsport—Axis Bank’s earnings disappointed the Street; however, sentiment was later lifted by strongerthan-expected results from ICICI Bank and HDFC Bank. On the other hand, earnings from Reliance Industries, an index heavyweight, did not provide much support. [EasyDNNnews:PaidContentStart]

An interesting observation related to FII activity. While Foreign Institutional Investors were net buyers to the tune of Rs 24,011 crore in the cash market between March and June 2025, they turned net sellers in July 2025, offloading Rs 22,186 crore worth of equities as of July 22.

Technically, the Nifty 50 has formed a “Three Black Crows” pattern on the weekly chart, signaling a three-week losing streak. However, context is key. Prior to this bearish formation, the index had printed a sizable bullish candle. Despite the subsequent three bearish candles, the index has not breached the low of that bullish candle, indicating that the ongoing decline is likely a routine correction rather than a structural breakdown.

Interestingly, during the correction that began in September last year, the index had posted four consecutive bearish candles. Hence, the price action in the current week will be crucial. As long as the index holds above the low of the sizable bullish candle, there is no significant reason for panic.

Structurally, since April, intermediate corrections have been shallow—limited to around 3 per cent—while the index has consistently sustained above its 50-day EMA. Over the past 16 sessions, the Nifty has retraced 61.80 per cent of the preceding 11-day, 5 per cent rally. The slower pace of this retracement suggests a robust price structure, which bodes well for the next leg of the uptrend.

A decisive close above last week’s high of 25,255 would likely open the gates toward 25,800 in the coming month. Additionally, Nifty has shown a positive hidden divergence—while price formed a higher low, the RSI printed a lower low—indicating a potential bounce from current levels. Major support is seen in the 24,800–24,600 zone, with immediate support around the 24,880–24,910 range.

With the US-Japan trade deal concluded, market attention now shifts to the outcome of the US-India bilateral trade negotiations, especially with the August 1 deadline approaching. Meanwhile, India VIX continues to hover near its April lows, signaling a phase of extreme complacency among market participants.

Historically, such low implied volatility levels have preceded sharp spikes—often followed by swift, directional market moves. While the exact timing of such an inflection point is uncertain, traders and investors should be prepared for heightened activity. A sudden spike in the VIX could serve as a precursor to a strong directional breakout, underscoring the need to remain vigilant and well-positioned.

In conclusion, the 24,800–24,600 zone remains a key support area. As long as the index holds above this range, a move toward 25,800 in the coming months remains likely. Investors should use this correction as an opportunity to accumulate quality stocks on dips— preferably those backed by strong earnings.

STOCK RECOMMENDATIONS
ELGI EQUIPMENTS .............................. BUY .......................... CMP ₹553.80
BSE Code : 522074
Target 1 .... ₹612 
Target 2 ..... ₹630 
Stoploss....₹532 (CLS)

Elgi Equipments is one of India's leading manufacturers of air compressors. On a consolidated basis, the company derives approximately 50% of its revenue from the domestic market, with the remainder coming from international markets. It produces a range of reciprocating compressors, screw compressors, centrifugal compressors, and also supplies garage equipment for the automotive segment through its subsidiary, ATS Elgi Ltd.

On July 9, 2025, the stock formed a green candle with an upper shadow, accompanied by the highest single-day volume recorded in over three months. Since then, the price has been trading within the high and low of that candle—a classic sign of accumulation. Why do we say this? The stock has consistently held the support of a rising trendline drawn from the lows of April and subsequent major swing lows. Additionally, it has managed to sustain above the 20-DMA. On the weekly time frame, the stock has formed an inside bar and is approaching a key resistance level at ₹563, defined by the 50-week moving average. Meanwhile, the weekly MACD is trending upwards and remains above its nine-period average, reinforcing a positive bias. On the daily chart, the trend strength indicator—ADX—is above 25, and the +DMI is above the -DMI, suggesting strong trend momentum with the bulls holding the upper hand. Based on the above technical indicators, we recommend buying the stock above ₹563–565 for a target of ₹612–630, with a stop loss at ₹532.

SHANTHI GEARS .................................. BUY ......................... CMP ₹560.85
BSE Code : 522034
Target 1 ...... ₹635 
Target 2 ..... ₹660 
Stoploss.....₹533 (CLS)

Shanthi Gears Limited (SGL), a subsidiary of Tube Investments of India Ltd, has been a pioneer in industrial gearbox manufacturing for over five decades, with a strong specialization in customized solutions. With a firm focus on innovation and diversification, SGL serves a broad spectrum of industries including Steel, Cement, Power (Thermal & Wind), Mining, Transportation, and Construction. Notably, SGL is the first Indian gear manufacturer to earn AS-9100D and IRIS (ISO/TS 22163:2017) certifications, underscoring its capabilities in the Aerospace and Railway sectors.

The stock recently witnessed a breakout from a consolidation pattern, supported by robust volume and a sizable bullish candle. It recorded the highest single-day volume in a year, indicating strong participation in the direction of the breakout. Trading near an 8-month high, the stock is now positioned above all its key short- and long-term moving averages, which are aligned in the ideal sequence. The daily MACD is trending upwards and remains above its nine-period average, confirming a bullish bias. Additionally, the daily RSI has entered bullish territory and continues on an upward trajectory, further supporting the positive momentum. Considering the above technical setup, we recommend buying the stock for a target of ₹635–660, with a stop loss at ₹533.

*LEGEND:  ◼ EMA - Exponential Moving Average.  ◼ MACD - Moving Average Convergence Divergence  ◼ RMI - Relative Momentum Index  ◼  ROC - Rate of Change  ◼ RSI - Relative Strength Index
(Closing price as of July 22, 2025)

Disclaimer : Above recommendations are based on various technical parameters and any fundamental input has not been considered for the recommendations. Follow strict stop loss for the recommendation.

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