With crude oil back near pre-Iran-war levels and bond yields easing, ICICI Direct's Dharmesh Shah says "buy the dip" remains the right strategy for Nifty, with 23,800 acting as a key support zone.

Indian equity markets are consolidating in a tight range, but the technical setup points to further upside in the weeks ahead, according to Dharmesh Shah, AVP Technical Analyst at ICICI Direct. Speaking to ET Now with the Nifty trading around 24,100, Shah laid out a clear roadmap for where the index is headed through July.

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Key support zone holding firm

Shah noted that the Nifty has spent the last two trading sessions oscillating between its 20-day and 100-day moving averages. He identified 23,700-23,800 as a strong support zone, a level where the 20-day and 50-day moving averages converge — and expects this range to hold during the market's current corrective phase.

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24,200 is the level to watch

On the upside, Shah pointed to the 100-day exponential moving average, currently around 24,200, as the major resistance that has capped the Nifty in recent sessions. He believes this level will eventually be breached, opening the door for the index to climb toward a target range of 24,500 to 24,800 during the course of July.

Banking heavyweights look technically stronger

Zooming into individual stocks, Shah flagged the Bank Nifty as an area of interest, noting that several heavyweight lenders, including HDFC Bank, Kotak Bank, Axis Bank, and SBI, are showing improved technical setups heading into the coming week. Given the banking sector's outsized weight in the index, strength here could be a key driver of the broader market's next leg up.

Despite the constructive medium-term outlook, Shah cautioned that the market could see some consolidation in the immediate term, broadly within the 23,800 to 24,200 range, before making a decisive move toward the 24,500-24,800 target zone he expects for July.

3 macro tailwinds supporting the rally

Shah highlighted a trio of favorable developments that could help push the market higher:

Crude oil has retreated to levels last seen before the Iran conflict escalated, around $70, easing a key cost pressure for the Indian economy

Bond yields have corrected lower, reducing borrowing cost concerns

FII selling pressure, which was heavy through June, appears to be receding, suggesting foreign outflows may be losing momentum

Together, these factors paint a more constructive picture for markets in the days ahead, Shah said.

The strategy: Buy the dip

With supports holding and macro headwinds fading, Shah's overall message to investors was straightforward: treat any pullback as an opportunity rather than a warning sign. Specifically, he flagged dips toward the 23,600-23,800 zone as attractive entry points, given the confluence of technical support and improving macro conditions.

The bottom line: Shah's technical read suggests the Nifty is in a healthy consolidation phase rather than a deeper correction, with crude, bond yields, and FII flows all trending in the market's favor. If the index can clear resistance near 24,200, a move toward 24,500-24,800 looks achievable before the month is out — making dips in the 23,600-23,800 range a buying opportunity rather than a reason for caution.