Technical View: Further major upmove unlikely until Nifty decisively surpasses 50-day EMA

Mumbai, July 30, 2025 — The benchmark Nifty 50 index is encountering a crucial technical hurdle as it struggles to sustain momentum above its 50-day Exponential Moving Average (EMA), a key resistance level that has capped recent rallies. Analysts believe a decisive breakout above this level is essential for the index to resume its upward trajectory.

As of Wednesday’s close, the Nifty stood at 24,126, marginally below its 50-day EMA of 24,180. Despite intraday attempts to scale this resistance, selling pressure emerged at higher levels, reflecting traders' cautious sentiment amid a mix of domestic earnings and global uncertainties.

Market Structure Indicates Indecision

The market’s failure to maintain gains above this moving average highlights underlying indecisiveness among investors. The broader index has been oscillating in a narrow range over the past two weeks, with sector rotation and profit booking playing a dominant role in shaping daily movements.

“The 50-day EMA is acting like a wall. Every attempt to breach it is met with resistance, indicating that bullish strength is not yet convincing,” said Amit Jagwani, Technical Head at Carat Equities. “Unless the Nifty gives a clean breakout with strong volumes and closes above 24,200 decisively, a sustained rally is unlikely.”

Technical Indicators Signal Consolidation Phase

Several technical indicators are aligning to suggest a consolidation phase rather than a continuation of the prior uptrend. The Relative Strength Index (RSI) is hovering around the neutral 50-mark, while the Moving Average Convergence Divergence (MACD) shows a flat trajectory with minimal divergence.

“Momentum indicators are not supportive of a strong uptrend at this point. We are likely to witness range-bound moves unless macro or earnings surprises emerge,” noted Neha Doshi, Senior Technical Analyst at Axis Securities.

The Nifty’s short-term support is placed around the 20-day EMA at 23,950. A breach below this could lead to further downside towards the 23,700–23,600 zone. On the upside, the 24,300–24,400 band will be closely monitored as the next resistance cluster if the index manages a breakout.

Sectoral Performance Remains Mixed

Sector-wise, Nifty Bank and IT indices are showing signs of fatigue after a brief rally, while FMCG and pharma stocks continue to offer defensive support. Auto and metal counters are largely subdued, awaiting cues from global commodity trends and domestic demand recovery.

“There's no broad-based leadership right now. It's mostly stock-specific action. The absence of a clear sectoral driver is keeping the index choppy,” said Vaibhav Shah, Portfolio Strategist at Dolat Capital.

Domestic and Global Triggers Keep Sentiment Muted

On the macro front, investors are awaiting cues from the U.S. Federal Reserve’s next interest rate signal, scheduled later this week. Domestically, Q1 earnings have been mixed, with positive surprises from select banks and consumption plays offset by weak numbers in capital goods and telecom sectors.

Foreign portfolio investors (FPIs) have been net sellers in July so far, putting additional pressure on the indices. Rising bond yields and cautious global sentiment around inflation and China’s sluggish recovery are also contributing to the hesitancy.

Investor Outlook: Wait for Confirmation

Technical experts advise traders and investors to stay cautious and avoid aggressive long positions until a confirmation of trend reversal is evident.

“Traders should stay nimble and adopt a buy-on-dips approach near strong support levels. Fresh longs should only be considered if the Nifty closes decisively above the 50-day EMA with a bullish candle and healthy volumes,” said Ravi Menon, Derivatives Analyst at HDFC Securities.

Positional investors are advised to focus on high-quality stocks with robust earnings visibility, especially in sectors such as FMCG, pharma, and select private banks.

The Nifty 50 remains at a technical crossroads. While the broader trend continues to favor bulls on a medium-term basis, short-term charts point toward fatigue and consolidation. The 50-day EMA has emerged as a pivotal level, and only a firm breakout above it can ignite fresh buying momentum. Until then, the market is expected to remain range-bound with a slight bearish bias.