Nifty & Nifty Bank End July in the Red: Is a Base Formation on the Horizon?

The Indian equity markets wrapped up the July series on a somber note, with both Nifty and Nifty Bank extending their losing streaks. This consistent downward grind hints at a corrective phase — but without a breakdown yet, could we be nearing a base formation?

 Nifty Struggles Below Key Moving Averages

Nifty closed the final session of July at 24,768.35, down 0.35%. This marked the fifth consecutive weekly loss — a rare feat that emphasizes the market’s struggle to regain bullish momentum.

• Monthly Performance: Down 2.93% for July
  
  
• Technical View:
  
  
  • Continues to trade below the 20-day EMA and 50-day SMA
    
    
  • Recent bounce from 24,598 appears more like a pause than a reversal
    
    
  • MACD remains in a negative crossover, with the histogram deepening
    
    
  • RSI sits at 40, reflecting continued weakness
    
    

Despite the weakness, no significant breakdown has occurred — the market appears to be consolidating within a broad range. Support at 24,470 is crucial; a decisive move below this level could open the gates for deeper cuts.

What to Watch for Nifty

• Short-Term Support: 24,600–24,550
  
  
• Resistance Zone: 24,950–25,070
  
  
• A breakout or breakdown beyond this band will likely shape the trend for August.
  
  

 Nifty Bank: More Signs of a Cautious Trend

Nifty Bank ended the session at 55,961.95, slipping 0.34%, and clocked a 1% loss for the week. The index was down 2.36% for July, continuing its correction after failing to breach the 57,300 resistance earlier this month.

• Technical Highlights:
  
  
  • Formed a neutral candle with wicks on both ends — signaling indecision
    
    
  • Trading below all key short-term moving averages (9-EMA, 20-EMA, 50-SMA)
    
    
  • RSI at 42, still above oversold but drifting lower
    
    
  • MACD remains in a negative crossover with the fast line diverging from the signal
    
    

Key Levels to Monitor:

• Support: 55,150 – A breach may lead to a larger trend reversal
  
  
• Resistance: 56,600–57,000 – Watch for failed retests or breakout attempts
  
  

If 55,150 holds, we could witness a relief rally or at least a sideways consolidation. But a breakdown would tilt the broader trend firmly bearish.

 Bottom Line: Correction or Setup?

While July was clearly a corrective month, there’s no panic selling yet — just a methodical pullback. The markets are lacking conviction, but not completely broken. Volatility remains low, and that often precedes sharp moves in either direction.

As we step into August, the key lies in watching whether Nifty and Nifty Bank hold their respective support zones. A base formation could be in play if they do.