Technical View: Nifty could see breakout above 25,500 for target of up to 26,100, say experts

Mumbai, July 4, 2025: The Nifty 50 index appears poised for a potential breakout above the 25,500 mark, according to several market analysts and technical chartists. If the index sustains above this key resistance level, it could open the path toward the 26,000–26,100 zone in the near term. This bullish projection is driven by strong institutional inflows, resilient global cues, and improving macroeconomic indicators.

Current Technical Setup

The Nifty has shown significant strength in recent sessions, closing at 25,431.65, just below the crucial resistance zone of 25,500. The index has been forming higher highs and higher lows for the past three weeks, reflecting strong bullish momentum.

Technical analysts point out that the Relative Strength Index (RSI) remains comfortably placed near 68, indicating room for further upside without entering an overbought zone. Moreover, the 20-day and 50-day exponential moving averages (EMA) have provided strong support during minor dips.

“A decisive close above 25,500 would confirm a breakout from the consolidation zone that has held for the last 7-8 sessions. This could propel the Nifty towards the 26,100 mark in the short term,” said Ruchit Jain, Lead Analyst at 5paisa.com.

Key Support and Resistance Levels

• Immediate resistance: 25,500

• Next resistance: 26,100

• Immediate support: 25,200

• Key support zone: 24,900 – 25,000

A breach of the 25,500 mark on high volumes could invite follow-through buying, while a failure to cross and sustain above this level may result in a mild retracement toward 25,200.

“The breakout will be meaningful only if it’s accompanied by strong volumes and market breadth. If that happens, Nifty could quickly scale up to 26,000 and even extend gains further if global cues remain supportive,” noted Amit Sajeja, Technical Strategist at Motilal Oswal Financial Services.

Sectoral Performance Aiding the Rally

The ongoing rally has been supported by strong performances in key sectors such as banking, IT, and auto. The Nifty Bank index surged over 1.2% in Thursday’s session, led by gains in ICICI Bank, HDFC Bank, and Kotak Mahindra Bank. Meanwhile, the Nifty Auto and FMCG indices also contributed to the uptrend.

“There is broad-based participation across sectors, which makes this rally healthier and more sustainable. Large-caps are leading, but midcaps are also catching up,” said Siddharth Bhamre, Head of Research at Religare Broking.

Global and Domestic Triggers

On the macroeconomic front, India’s recent manufacturing PMI data came in at a robust 58.7, indicating strong business activity. Moreover, the RBI’s policy stance remains supportive with no immediate rate hike in sight. Globally, cooling inflation in the U.S. and expectations of a rate cut by the Federal Reserve in the September meeting have provided comfort to equity markets.

Foreign institutional investors (FIIs) have turned net buyers for the past two weeks, boosting sentiment further. According to NSDL data, FIIs bought over ₹7,300 crore worth of equities in July so far.

“FII buying, coupled with strong corporate earnings projections, has laid a solid foundation for this breakout. Unless there is a sharp global shock, markets look set to continue their upward journey,” said Vinod Nair, Head of Research, Geojit Financial Services.

Caution Flags: Volatility and Global Risks

Despite the bullish undertone, experts advise investors to remain cautious of volatility spikes. The India VIX, currently hovering around 12.2, could rise in response to global geopolitical events or earnings disappointments. Any escalation in U.S.-China trade tensions or Middle East conflicts could also impact investor sentiment.

“While the setup is constructive, markets never move in a straight line. It’s important for traders to manage risk with strict stop losses and avoid over-leveraging,” said Kunal Shah, Technical Head at LKP Securities.

Investor Outlook: Momentum Favours Bulls

For positional traders, the risk-reward ratio is attractive if Nifty breaks out convincingly above 25,500. However, traders should look for confirmation via volume spikes, strong market breadth, and follow-through moves in heavyweight stocks like Reliance Industries, TCS, and Infosys.

Long-term investors are also advised to stay invested and use any dips as buying opportunities, especially in banking, capital goods, and consumer-facing sectors.

“We are in the early stages of a new market cycle, and corrections should be viewed as part of a broader uptrend. The next milestone for Nifty could be 26,100 in the short term, and 27,000 over the next few quarters,” said Ayesha Pathania, Equity Strategist at Prabhudas Lilladher.

All eyes are now on the 25,500 level, which remains the key technical inflection point for the Nifty. A confirmed breakout could trigger a fresh round of buying and take the index toward 26,100, provided supportive macro and global cues continue. While risks persist, the prevailing momentum appears to be with the bulls, giving confidence to investors and traders alike.