Weekly Note 12 July 2025 by Mr. Ajit Mishra, SVP - Research, Religare Broking Ltd
Markets End Lower Amid Trade Policy Jitters; Q1 Earnings Season to Steer Sentiment
Markets drifted lower during the week and lost over a percent, primarily pressured by the lingering uncertainty surrounding global tariffs and a disappointing start to the earnings season. While the tone remained largely stable in the first three sessions, profit booking in the final sessions dragged the indices lower. Eventually, both the Nifty and Sensex settled near their weekly lows at 25,149.85 and 82,500.47, respectively.
Key Market Drivers
Sentiment weakened amid heightened global trade tensions following U.S. President Donald Trump’s renewed tariff threats on Canada and other key partners. Although there were expectations of an interim trade deal between the U.S. and India, the lack of clarity kept risk appetite in check. Additionally, a weak start to the Q1 earnings season—especially after IT major TCS reported below-par results—added pressure to the markets in the final session.
Sectoral Snapshot
All key sectors, barring FMCG, ended in the red. IT, auto, and metal were among the top losers. However, positive commentary from FMCG majors on demand revival helped cushion losses in the defensive space. Meanwhile, the broader markets also came under pressure and lost nearly 1.5% each, weighed down by overbought technical conditions and caution ahead of upcoming earnings releases.
Key Events to Watch
Looking ahead, the earnings season will be in full focus. A packed calendar includes results from HCL Tech, Tech Mahindra, Axis Bank, ICICI Bank, Wipro, JSW Steel, L&T Finance, and HDFC Bank, among others.
On the macroeconomic front, participants will closely track the WPI and CPI inflation data scheduled for July 14 for further cues on the economy. Apart from these, the trend in FII flows and movement in crude oil prices will also remain on traders’ radar.
Globally, markets will watch for any updates related to trade negotiations and tariffs, along with key economic data releases such as U.S. inflation and China’s GDP numbers.
Technical Outlook
Nifty slipped below its crucial short-term moving average—the 20-day EMA—and has entered the previous consolidation range of 24,500–25,200. This breakdown has disrupted the positive bias, potentially leading to extended consolidation. On the downside, the 24,500–24,900 zone will act as a key support area, while on the upside,
25,550 remains a critical hurdle in the event of a rebound, with major resistance at 25,750.
The banking index continues to show resilience. However, mixed trends among private sector banking heavyweights are keeping participants uncertain about the next directional move. We expect the 55,100–55,900 zone to provide strong support in case of profit booking, while the previous swing high near 57,600 and 58,400 will act as resistance levels.
Strategy Ahead
We anticipate a consolidation phase in the index with a negative bias in the near term, following the recent fall. Volatility is expected to persist amid global uncertainties and the unfolding earnings season. Traders are advised to maintain a stock-specific approach, focusing on companies with strong earnings and relative strength.
On the sectoral front, defensives such as FMCG and pharma appear more favorable, while other sectors may continue to offer opportunities on both the long and short side. The defense sector, which was in focus recently, is showing early signs of a short-term trend reversal—hence, participants should exercise caution and avoid averaging into losing positions.
With broader indices also signaling potential for further profit booking, investors are advised to consider partial profit-taking on existing positions and adopt a cautious approach when adding fresh trades.
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