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Heading: Volatility to prevail although pullback on the cards amid oversold conditions…

ICICIdirect Research 08 Aug 2025 DISCLAIMER

Volatility to prevail although pullback could be on the cards amid oversold conditions led by selling from FIIs and currency depreciation.
Key Highlight: Despite multiple undesirable announcements on the tariff front, Nifty managed to defend key support threshold of 24500 which has been held over past ~3 months, highlighting inherent strength.
What to expect: In the upcoming truncated week, any positive development on the tariff front would result into strong pullback towards psychological mark of 2500. In the process, bouts of volatility cannot be ruled out tracking tariff development wherein strong support is placed at 24200


Our pullback view is based on following observations:
Price Structure: Index bounced from lower band of past three months consolidation range (25300-24500)
Gap Area: Nifty managed to hold gap area seen during mid-May (24164-24378)
Oversold Conditions: Weekly stochastic bounced from extreme oversold conditions. Historically, buying in such oversold conditions garnered ~6% returns in subsequent one month
Price Wise Maturity: Since Covid lows, the index has not closed on a negative note for more than 5 consecutive weeks and subsequently witnessed a technical pullback.
Market breadth: The % of stocks above 50 days EMA is approaching lower band of bull market phase (30-25) that offers incremental buying opportunity 
 
Key Monitorable for the coming week:
Development of Bilateral trade deal negotiations
Truce deal between Russia & Ukraine
US and Domestic inflation print

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