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Heading: Markets to remain on edge ahead of US trade deal development and onset of earning season

ICICIdirect Research 04 Jul 2025 DISCLAIMER

Equity benchmarks underperformed its global peers amid increasing anxiety ahead of trade deal deadline. Nifty dropped 0.7% to settle the week at 25400. Sectorally, Consumption, Pharma, Defence remained at forefront while, realty, financials (ex- PSU Banks) underwent profit booking.

What to expect: The index is sustaining well above recent consolidation breakout that coincided with 20 days EMA which has been majorly held since April-25. We believe, ongoing retracement would make market healthy and pave the way to head towards 25800 in the coming week.

Key Monitorable: All eyes will be on outcome of US-India bilateral trade deal coupled with onset of Q1FY26 earning season which would dictate the further course of action. The better-than-expected outcome would fuel momentum to challenge All Time High in coming month wherein strong support is placed at 24800.

Structure: Ove past three months index has maintained its winning streak while absorbing host of negative news around geo-political uncertainties coupled with clarity of trade tariff. In the process, market breadth has shown gradual improvement as currently ~60% stocks of Nifty 500 universe are trading above 200 days EMA compared to last month's reading of 52% that bodes well for durability of ongoing up move.

Seasonality: July month has been one of the best month for the Nifty as since 1991, 71% of the time returns have been positive with an average return of 2.5% 
Global Macros: Weakness in US Dollar index would result into FII's inflow in emerging markets while cool off in Brent crude oil would boost the market sentiment.

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