Sensex, Nifty Set for Weak Opening Amid Tariff Concerns; Key Levels to Watch on July 16

Wednesday, July 16th: Indian equity benchmarks, Sensex and Nifty, are anticipated to commence trading on Wednesday with a muted tone. This cautious sentiment is largely influenced by escalating global trade tensions, particularly concerns stemming from remarks by President Donald Trump regarding potential tariffs on pharmaceuticals and semiconductors, coupled with delays in concluding the India-US trade deal.

As of 8:30 AM IST, Gift Nifty futures were trading at 25,160.50, down by 7 points or 0.03%, signalling a negative start for the domestic markets.

Market Setup: Cautious Tone on Global Developments

The overnight market sentiment was dampened by statements from President Donald Trump, who hinted at the possibility of imposing tariffs on pharmaceuticals by the end of July, with semiconductor levies also being considered. He indicated that these tariffs might start low and then escalate significantly within a year.

Additionally, ongoing discussions for an India-US trade deal continue, with an Indian delegation currently in Washington D.C., as the August 1st deadline for reciprocal tariffs approaches. While some reports suggest a deal for India might involve tariffs below 20%, the uncertainty surrounding the outcome is contributing to investor unease.

Previous Session Recap

On Monday, the Indian markets managed to break a four-day losing streak, primarily driven by a cooling in retail inflation. This development has fueled expectations of a potential rate cut by the Reserve Bank of India, bolstering investor confidence. Notably, broader market indices demonstrated a stronger performance compared to the benchmark indices in the preceding session.

FII-DII Activity on July 15

• Foreign Institutional Investors (FIIs): Net bought Indian equities worth ₹120 crore
• Domestic Institutional Investors (DIIs): Net bought ₹1,555 crore worth of shares

Technical Outlook and Key Levels

The Nifty index formed a “reasonable positive candle” on the daily chart, showing a minor upper shadow. This suggests an attempt by the index to bounce back from its lower support zone.Immediate support: 25,000.

• Immediate Support: 25,000
• Immediate Resistance: 25,350
• Further Upside Levels (if resistance is breached): 25,700, followed by 26,200

According to technical experts, a sustained move above the 25,350 level could confirm a short-term bottom reversal, potentially leading to a further upward rally.

Bank Nifty Outlook

The Bank Nifty index found support near an upward-sloping trendline and bounced back, successfully surpassing its 20-day Exponential Moving Average (EMA). This indicates improving momentum within the banking sector.

• Support Zone: 56,800–56,700
• Resistance Zone: 57,200–57,300
• Upside Targets on Breakout: 57,700 and 58,200

Volatility & Derivatives Data

• India VIX: The volatility index dropped by 4.17% to 11.48, marking its lowest close since April 26, 2024. A falling VIX generally indicates decreasing market fear and increasing stability.
• Put-Call Ratio (PCR): The PCR rose to 0.88 from 0.72 in the previous session, signalling a shift towards a more bullish sentiment. A PCR closer to 1 or above suggests more put options being written (bearish bets by option writers), while a lower PCR indicates more call options being written (bullish bets by option writers). The increase indicates a strengthening belief that declines may be limited.

Market Outlook

Despite the previous session’s bounce-back driven by inflation data, the overarching concerns regarding global tariffs and the uncertain outcome of ongoing trade agreements are expected to continue influencing market direction. While technical indicators suggest a cautious optimism, with bulls potentially gaining strength if key resistance levels are successfully cleared, investors will remain vigilant. Monitoring key levels for intraday cues and staying alert to any significant global or policy-related developments will be crucial for navigating the market in the coming sessions.

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