Trade Setup for July 31: Key Nifty levels and what should one do in case of a gap down

Just as the Nifty 50 index began to find some semblance of a recovery over the last two days, US President Donald Trump has announced that India will have to pay a 25% tariff starting August 1 for exports to the US, along with a penalty, for purchasing items from Russia. However, he has not specified what the penalty would be.

Although the Nifty has struggled to cross the 24,900 mark decisively in both Tuesday and Wednesday's trading session, the bulls were taking comfort from the fact that the index did not grind lower, and managed to close with gains.

After Trump's announcement, the GIFT Nifty futures have taken a 150-point knock. Thursday also happens to be the monthly expiry of the Nifty 50 contracts and the final trading day of the month.

Here's what some chartists and market experts told CNBC-TV18 as to what one should do in case the Nifty does open gap-down on Thursday and how could the markets react to this news:

"Markets will react negatively to the imposition of tarriff on India," Nilesh Shah of Kotak Mahindra AMC said. You can read his full remarks here.

"The Nifty index finds itself at a crucial juncture as a Bullish Engulfing candlestick pattern has formed near the important support zone of 24,610 – 24,560," said Sacchitanand Uttekar of Tradebulls.

"Support remains firm within the 24,700 – 24,600 region, but a break below 24,560 could trigger a domino effect that may drag the index towards the 24,000 level in the weeks ahead. A decisive close above 25,250 is necessary to signal the end of the current consolidation-cum-corrective phase. Until such a breakout materializes, traders should continue to deploy a long-short strategy while maintaining strict risk management," he added.

"In case of a downside triggered by the Trump tariff jinx, we anticipate a knee-jerk reaction in the markets. In such a scenario, 24,600 – which lies just below the recent swing low – might act as immediate support. In a worst-case scenario, we do not expect Nifty to breach 24,450, a key bottom zone from where stability could return," Mehul Kothari of Anand Rathi said.

"Traders should maintain a wait-and-watch approach near the support zones of 24,600–24,450 and avoid aggressive shorting. Fresh long positions may be considered only if Nifty stabilizes above 24,900 with strong breadth. For now, risk management and selective stock-picking is key," he added.

Utsav Verma of Choice Broking said that sectors like textiles, pharmaceuticals, and automotive components—key Indian exports—are likely to be most impacted and may see reduced investor interest in the short term.

"The zone of 24,640–24,560 holds crucial significance — not only from an options open interest standpoint but also as it coincides with the recent swing low formed on Tuesday. A breakdown below this level could trigger fresh selling, dragging the index toward 24,400," Sudeep Shah of SBI Securities said.

"A sustained breach of key support levels could trigger stop-loss-based unwinding by long holders, while any pullback must decisively cross 25,100 to indicate strength," he added.