FII’s SHORT COVERING LEAD NIFTY’S BULL RUN! BANK NIFTY SETS ITS SIGHTS AT 60000

A strong buying into the broader markets led Bulls to dominate last week, where Nifty once again rose back towards its intermediate hurdle of 24500-24600 with highs of 24429.40, while a decisive close at 24383.60 was achieved with a net gain for the week of 2.59%, while Bank Nifty gave a 1.01% net gain for the week. Whereas “Nifty IT” decisively gave a humongous gain of 6.75% for the week on our bullish remark lately. The fear of Brent crude was taken up lightly as FII’s started covering their shorts massively.

Overall, we have been clear on our two major remarks: one is a bullish bet on “Nifty IT” while the other one is short covering by FII’s. So far both went exactly as we mentioned earlier. “Nifty IT” in just 3-4 weeks rise back from the depth of 26000-27000 to almost hitting our earlier mentioned target of 32000 by making high’s of 31846.40 while FII’s from their net longs of 7-8% now 11-12% while net shorts in index from 2.71 lacs to 1.73 lacs in just one week time & it looks like it has just began once they cover more shorts Nifty may easily ride above 25000 this time for good.

For the overall scenario to consider, we have the below-mentioned factors which created havoc & high volatility in the broader markets with the US-Iran war escalating further. Rupee, crude oil, Dollar Index, etc. Let’s dig it out one by one:

• Rupee: Rupee despite intervention of the RBI intervened with dollar swap auction & issuance of G-sec securities it continued to decline towards 96.655 previous to last week &created a panic in banking & financial sector but as earlier mentioned technically it has perfectly formed a double top formation near to 97 & a cool off towards 93-94 remains imminent in August series while so far it has hit 95.255 so far marginally away from our target.
• Dollar Index: DXY followed our earlier-mentioned immediate resistance at 102, so now it may settle down near to 98.
• Brent Crude oil: Brent crude oil as earlier mentioned it not only hit 85$ but also stretched its cool-off towards 80$ per barrel, but closed near $ 91. We remain neutral here with a broad trading range of 80-96$ per barrel, with a neutral stance till the time it remains within the range.
• FII’s Remained Covering Shorts: FIIs net longs were between 7-8% while net shorts were at 2.71 lacs; with possible saturation levels mentioned it cooled off with massive short covering where FII’s net longs now remained at 11-12% while net shorts in index declined to 1.73 lacs. If this remains like this, we expect more short covering to happen in the August series itself.

India Vix hit 9.47-kind of levels 2 weeks back while it once again has risen towards 14.76 & as earlier mentioned we didn’t expect it to sustain anywhere above 15-16; hence a cool-off towards 11-12 was mentioned & we achieved that within a week as it remains at 11.755 as of now. We remain neutral for the coming week. Here, FIIs ’ net longs were between 7-8% while net shorts were at 2.71 lacs with possible saturation levels mentioned it cooled off with massive short covering where FII’s net longs now remained at 11-12% while net shorts in index declined to 1.73 lacs. If this remains like this, we expect more short covering to happen in August series itself.

On the institutional from both FII’s &DII’s were net buyer’s where FII’s in cash market boughtEquities worth of Rs. 5,949.96 cr. last week while DII’s remained net buyers with net buying of Rs. 5,387.66cr.

Nifty now once again gave a bullish weekly close at 20 week’s high at 24383.60 holding the intermediate hurdle at 24500-24600 kind of levels. Any move above this we may easily get 25000-25300 kind of levels while crucial supports have now shifted slightly higher at 23600-23800 kind of levels. FII’s covered their shorts from 2.71 lacs to 1.73 lacs contracts ass on 31/07/2026. The possible buying into the broader market could be witnessed by Bank Nifty & Reliance Industries this time.

Bank Nifty crucial supports shifted slightly higher at 56000-56600 kind of levels while intermediate hurdle seen at 58700 any move above this could give us 60000-61000 kind of levels in August series itself.The support may come from large-cap Private & Public sector banks both.

“Nifty IT” after completing our earlier mentioned target & almost hit 32000 mark we remain neutral till the time it surpasses 32000 on Weekly closing basis while crucial support remains at 28000-29000 this time..

Brent crude oil as earlier mentioned it not only hit 85$ but also stretched its cool off towards 80$ per barrel but closed near to 91 we remain neutral here with a broad trading range of 80-96$ per barrel with neutral stance till the time it remain within the range.

India remained on the higher ground on GDP data front where it achieved a milestone with historic growth rate of 7.80% in Q1, 8.20% in Q2 & 7.80% in Q3 of FY 25-26 completely mocking Trump’s “Dead Economy” jibe at its face where India remained on the Top-notch developing economy set for a target of $25 Trillion economy by 2047 on track. However, chairman of Reliance Industries Limited Mr. Mukesh Ambani said in its latest AGM last week that India has the capacity to achieve 10% GDP growth annually which once again has set another long-lasting futuristic goal for the entire economy.

FII & DII’s monthly data so far in the FY 2026-27 has been interesting where FII’s bought in few months initially then abstain from buying or remained to being on the sell side while DII’s remained the biggest supporter of the broader markets. The data below mentioned:

The Indian Equity markets have seen many recent news items, where most of the news items are mentioned below:

• Rupee despite intervention of the RBI intervened with dollar swap auction & issuance of G-sec securities it continued to decline towards 96.655 previous to last week & created a panic in banking & financial sector but as earlier mentioned technically it has perfectly formed a double top formation near to 97 & a cool off towards 93-94 remains imminent in August series while so far it has hit 95.255 so far marginally away from our target.
• DXY followed our earlier-mentioned immediate resistance at 102 so now it may settle down near to 98.
• Brent crude oil as earlier mentioned it not only hit 85$ but also stretched its cool-off towards 80$ per barrel but closed near $ 91. We remain neutral here with a broad trading range of 80-96$ per barrel with a neutral stance till the time it remains within the range.
• On the other side, FIIs ’ net longs now near to 11-12%& a recovery is possible towards 17% followed by 27% till the coming weekend, which continuously signifies & now support could be at 23600-23800in Nifty.

In the broader markets witnessed some key events & their outcomes last week, which are described as follows:

Domestic News:

1. Gujaratis sold ₹3,804 crore worth of gold in the first half of 2026, cashing in on record-high prices that peaked near ₹1.79 lakh per 10g in January.
2. The headline reflects a growing view among economists: AI’s near‑term labour‑market risk is more about wage compression than mass unemployment.
3. SEBI has barred ZEEL’s founder Subhash Chandra and CEO Punit Goenka from the securities market for 1 year each and fined ZEEL ₹30 lakh, while banning the company from accessing markets for 2 months, over an unauthorised mortgage of ZEEL’s Hyderabad land to secure ₹726 crore of promoter‑linked loans without board approval or disclosure.
4. Government Cabinet Decisions: The Cabinet has cleared ₹4,50,988 crore across five key strategic initiatives, including a ₹3.1 lakh crore 5-year extension for the PM-KISAN scheme.
5. Trade Relations: The first tariff-free shipment of Scottish salmon arrived in Bengaluru following the UK-India Comprehensive Economic Partnership Agreement (CETA).
6. Apple India Record: Mac sales in India achieved their highest-ever quarter in terms of revenue and volume.
7. Anti-Paper Leak Bill: The Rajya Sabha passed the Anti-Paper Leak Bill introducing tougher penalties and stricter enforcement to curtail cheating and exam leaks.
8. FPI Inflows: Foreign Portfolio Investors returned to net buying in July after a four-month streak of outflows.
9. Income Tax Returns: The deadline for filing individual income tax returns (FY 2025–26) reaches its final hours, with no official extension announced.
10. India Sovereign Bond Index Inclusion Deferred: Bloomberg Index Services Limited (BISL) has delayed adding Indian government bonds to its flagship Bloomberg Global Aggregate Index, stating that recent market and tax accessibility reforms need more time to stabilize in daily market practice.
11. Energy Prices Volatility: Global oil prices registered sharp movements driven by shifting Middle East supply and transit dynamics.
12. EPFO Auto-Refund Pilot: Over 1.18 lakh dormant EPFO accounts verified to receive automatic provident fund refunds (for balances up to ₹1,000) without requiring manual claims.

International news: 

1. Crude Oil Supplies Secured: Indian Oil Corporation (IOC) secured sufficient crude oil supplies covering the entirety of August and most of September.
2. US Tech Earnings Impact: Amazon shares surged over 11% on strong quarterly performance, while Apple experienced a sharp sell-off amid valuation re-evaluations against Nvidia.
3. Commodities Movement: Comex gold and silver faced sharp drops following a rebound in the US dollar and hawkish Federal Reserve commentary.
4. US–Iran Tension & Pause in Strikes: Diplomatic efforts continue as US military strikes on Iran paused following weeks of escalating strikes, with negotiations focusing on shipping transit through the Strait of Hormuz.
5. AI Security Disclosures: Recent testing by Anthropic highlighted emerging security risks after AI models inadvertently accessed open internet networks during system evaluation.
6. Gold & Precious Metals Trading: Bullion traded near $4,100 per ounce, supported by geopolitical uncertainties and the U.S. Federal Reserve maintaining interest rate stability.
7. Asian Tech & Semiconductor Rally: Asian markets recorded strong gains led by South Korea’s Kospi, buoyed by robust corporate tech earnings (including AI-driven semiconductor demand) and positive global tech guidance from Microsoft.
8. Chinese busmaker Foton is expanding its footprint in Sri Lanka’s public transport fleet, while long‑time supplier Ashok Leyland appears to be losing share in new procurements
9. Foreign Affairs: India’s Ministry of External Affairs criticized elections in PoJK, characterizing them as a cosmetic exercise to mask illegal occupation.
10. Apple Hits $5 Trillion Valuation: Apple briefly touched a $5 trillion market cap, becoming the second company after Nvidia to reach the milestone.
11. Google Gemini Spark in India: Google is rolling out its Gemini Spark AI agent to Indian subscribers next month for workflow automation.
12. Red Sea & Regional Friction: Escalating regional tensions continue as Houthi forces launched missile and drone strikes toward target areas in the Mideast, raising concerns over maritime security in the Bab el-Mandeb Strait.
13. Nifty now once again gave a bullish weekly close at 20 week’s high at 24383.60 holding the intermediate hurdle at 24500-24600 kind of levels. Any move above this we may easily get 25000-25300 kind of levels while crucial supports have now shifted slightly higher at 23600-23800 kind of levels. FII’s covered their shorts from 2.71 lacs to 1.73 lacs contracts ass on 31/07/2026. The possible buying into the broader market could be witnessed by Bank Nifty & Reliance Industries this time.
14. Bank Nifty crucial supports shifted slightly higher at 56000-56600 kind of levels while intermediate hurdle seen at 58700 any move above this could give us 60000-61000 kind of levels in August series itself. The support may come from large-cap Private & Public sector banks both.
15. “Nifty IT” after completing our earlier mentioned target & almost hit 32000 mark we remain neutral till the time it surpasses 32000 on Weekly closing basis while crucial support remains at 28000-29000 this time.
16. In Sensex crucial supports now remain within range of 75000-76000 range while immediate target could be towards 80000 kind of levels.
17. Nifty Financials may find its crucial support levels now at 25000kind of levels upside immediate target still lies at 28000-kind of levels.
18. As of January 2026 the number of Demat Accounts has hit a whopping 22.9 crores this not only helps the capital markets directly but also directly to Equity investments.
19. The monthly SIP in Indian markets have now increased to an all-time high of Rs. 32,087 cr. per month as on March 2026.

Brief Levels of Nifty / Sensex/ Bank Nifty / Nifty Financials / Nifty IT:

Nifty CMP:  24383.60
Nifty Potential Upside:24500-24600 / 25000-25300 (As the case may be)
Nifty Immediate Crucial Support:23600-23800

Sensex CMP: 78094.64
Sensex Potential Upside: 80000
Sensex Immediate Crucial Support: 75000-76000

Bank Nifty CMP:  57264.85
Bank Nifty Immediate Upside:58700 / 60000-61000 (As the case may be)
Bank Nifty Immediate Crucial Support: 56000-56600

Nifty Financial CMP: 26594.05
Nifty Financial Immediate Target: 28000
Nifty Financial Immediate Crucial Support: 25000

Nifty IT CMP: 30708.95
Nifty IT Immediate Target:32000
Nifty IT Immediate Crucial Support: 29000

 About the Author:

Mr. Vishal Gupta, a SEBI Registered Research Analyst, is the founder of “VG STOCK RESEARCH”, founder of “THE ANALYSIS ROOM”, a writer & an advisor having rich experience in Indian Equity Markets who has spent years comprehending an industry-wide shift and risk management with more than 14+ years exploring in depth analysis of the Equity & Derivatives.

He has also been teaching Fundamental Analysis for quite some time, giving investors/traders comprehensive knowledge & skills of Indian Equity Markets.

Email I’d: contact@vgstockresearch.com
Contact: +91-9953934544
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