Market Commentary: July 18th – A Shifting Landscape for Indian Equities
As of July 18th, Indian equity markets are experiencing a significant pivot, with both the NIFTY and NIFTYBANK indices breaching their crucial support levels of 25,000 and 56,600, respectively. While we await a definitive daily close below these zones to confirm a breakdown, the prevailing sentiment is unequivocally bearish, a trend that has persisted since the beginning of July. This current market behavior stands in stark contrast to historical patterns, where July has typically been the most favorable calendar month for equity markets globally, including India. However, 2025 has proved to be an anomaly, and indeed, it appears poised to enter an even more dramatic phase starting in September.
The rally initiated from the April 7th low has been notably less robust than what one might expect. Despite a couple of strong gap-ups in April and a substantial 1,000-point surge in Nifty following the India-Pakistan ceasefire understanding—which propelled the index from 23,000 to 25,000—the overall momentum has been subdued. Over the past three months, there have been fewer than 15 trending sessions on the upside with daily gains exceeding 0.6%. This highlights the inherently weak nature of this rally. Adding to the complexity, our regulator later disclosed that nearly five of these fifteen positive trading sessions were influenced by instances of index manipulation. While such occurrences are unfortunately part of this profession and must be acknowledged, it underscores the fragility of the recent gains. Despite these factors, the Nifty’s two-month return remains at a flat 0%. Having traded markets since 2014, such prolonged periods of stagnation and manipulated gains are, in my experience, a rare phenomenon.
From a time-cycle perspective, July 18th was identified as a critical date, alongside July 21st. Given the downside swing observed today, a similar downward movement on July 21st would further solidify the confluence of time and price indicators, reinforcing the bearish outlook. With the India VIX currently trading below 13 (indicating low expected market volatility), a significant gap-down on Monday would be crucial to establish a strong, trending downside move. Should this not materialize, we can anticipate a slower, more protracted unwinding of positions. On the price front, 24,750 stands as a key support level; a breach of this mark would likely lead to a retest of 24,450.
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