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On Monday, Nifty 50 rose 0.64% to close near 24,722, snapping a two-day losing streak as investor sentiment improved amid hopes of a US Fed rate cut following weak July jobs data.

Metal and auto stocks led the gains, with Hero MotoCorp and TVS Motor rallying after posting strong results. However, IT stocks witnessed a pullback rally despite concerns over U.S.-India trade tensions and the global revenue outlook. Broader market indices saw modest gains, though sectoral breadth was mixed.

Benchmark indices rebounded sharply on Monday, with the Sensex gaining over 400 points and Nifty rising 0.64% to close at 24,722.75, buoyed by strong performances in metal and auto stocks alongside positive cues from Asian markets. During the session, Nifty touched an intraday high of 24,736.25, up 169.3 points. Market breadth remained positive, as reflected in a favorable advance-decline ratio, signaling broad-based participation in the rally.

Technically, Nifty 50 witnessed a rebound from its 100-EMA, offering short-term support. However, it failed to establish a higher-high higher-low structure in today’s session, signaling hesitation in upward momentum. The RSI has inched marginally higher and now hovers around 42, indicating a modest improvement in strength. Meanwhile, the MACD continues to trade in a negative crossover, positioned below both its signal line and the zero axis. This combination of indicators reflects a cautious near-term outlook, with momentum still subdued. A convincing reversal remains unlikely unless the index decisively reclaims key resistance levels, supported by strong follow-through buying.

According to O'Neil’s methodology of market direction, market status has been downgraded to an "Uptrend Under Pressure" as Nifty breached its "50-DMA" and the "distribution day count" rose to seven.

Nifty 50 has shown strength by rebounding from its 100-EMA and closing above 24,700, signaling potential for a bullish turnaround. A move above 24,900 could trigger further upside toward 25,300, confirming a shift in momentum. On the downside, support at 24,480–24,400 may attract buyers, but a break below this zone could lead to a decline toward 24,200. Price action near these key levels will be crucial in determining the index’s next directional move.

On Monday, Bank Nifty opened on a weak note and traded with heightened volatility throughout the session. After slipping to its intraday low of 55,437.30, the index found support at lower levels, helping it to recover losses and close in positive territory. This late-session recovery led to the formation of a bullish candle on the daily chart with a lower-high and lower-low price structure, signaling weakness in the banking space. The index opened at 55,557.50 and moved upward within a narrow range of 55,752.45 and 55,437.30 on the downside. Despite early weakness, sustained buying helped Bank Nifty end the day on a firm note.

The momentum indicator, RSI, continues to drift lower and is currently hovering near 39, signaling a decline in underlying strength. Complementing this weakness, the MACD has registered a negative crossover, further confirming bearish momentum in the short term. Despite these technical headwinds, O’Neil’s methodology of market direction maintains Bank Nifty's status as an “Uptrend Under Pressure." This classification highlights a fragile market environment, marked by emerging caution and early signs of institutional selling. The setup suggests that while the broader trend remains intact, the index is vulnerable to further weakness unless strong support levels hold.

Bank Nifty managed to end the session on a positive note, supported by a partial intraday recovery from lower levels. Going forward, the zone around 55,400 will act as a crucial support. A decisive breach below this level could intensify selling pressure and trigger further downside. On the flip side, immediate resistance is seen near 56,500, which must be crossed convincingly to signal bullish continuation. The index is currently trading within this well-defined range, and a breakout or breakdown from it is likely to set the tone for the next directional move. Traders should closely watch these levels in the coming sessions, as they hold the key to confirming a clear trend.

MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. It offers tools and resources to help investors make informed decisions based on the CAN SLIM methodology, developed by legendary investor William J. O'Neil. You can access a 10-day free trial by registering on its website.

Trade name: William O’Neil India Pvt. Ltd.

Sebi Registration No.: INH000015543

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

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