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Nifty, on July 5, gained more than 100 points on buying in metal and banking stocks to close at 15,834, its highest level since June 25.

On July 2, the benchmark index recovered from the lower levels and closed in the green after four sessions of consecutive fall. This move has saved Nifty from closing below the important support level of 20-day EMA, currently placed at 15,697.

The index found support on the upward sloping trendline, adjoining the daily lows of April 22, 2021 (14,151) and May 14, 2021 (14,591).

In the derivative segment, we have seen Put writing at 15,600-15,700 levels.

Though Nifty witnessed correction during the last week, it has not violated important supports of 15,600-15,700 levels.

On the higher side, a close above 15,900 would result in a fresh breakout and in that case, we can expect Nifty to extend the rally towards 16,100-16,200.

India VIX closed at the lowest level since December 2019. Lower VIX indicates volatility has reduced significantly.

While we remain open to further upsides, a short-term trend reversal would be confirmed if Nifty closes below 15,600.

For traders, our advice is to remain bullish and accumulate longs on declines with the stop loss of 15,600 on a closing basis.

On the higher side, Nifty is likely to find resistance at 15,915 and 16,100 levels.

The sectors that are looking strong on the medium to long-term charts and are expected to outperform in the coming weeks are IT, pharma and metals.

While Nifty is trading in a narrow range, the Nifty Smallcap index broke out on the daily chart last week.

We expect their outperformance to continue in the coming days also. Therefore, the focus of the traders should be on mid and small-caps for higher returns.