Nifty, Sensex pullback from day's high, likely to remain range-bound amid high volatility

Nifty is likely to remained rangebound in the range of 24,600-23,800.

Frontline indices Nifty 50 and Sensex slid deeper into the red after giving up the morning gains in the afternoon session on Tuesday, May 6, as volatility reigned.

At 11:25 am, the Sensex was down 240.52 points or 0.30 percent at 80,556.32, and the Nifty 50 was down 86.10 points or 0.35 percent at 24,375.05. About 959 shares advanced, while 2,284 shares declined which indicated the market breadth was in favour of the bears, and 118 shares remained unchanged.

Most sectoral indices sank into a pool of red, with the FMCG and auto index posting mild gains as the sole outliers. The banking and financial indices were among the hardest hit, with the PSU Bank index cracking over two percent.

The broader markets felt the pinch, as the Nifty Midcap 100 and Nifty Smallcap 100 gauges sank over one percent each.

The India VIX, also known as the fear index, which measures volatility was hovering near the 18.43 mark, rising half a percent, indicating high levels of caution and uncertainty in market participants.

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Going ahead, analysts expected that the Nifty 50 index will extend the consolidation seen over the past six sessions, in the range of 24,600-23,800. A close above 24,600 will open further upside towards December 2024 high of 24,850 in the coming sessions, said experts at Bajaj Broking.

“Considering the mixed signals and the important resistance levels just ahead, traders should consider taking a cautious approach for now, especially when dealing with positions that involve high leverage. It’s a good idea to book partial profits during rallies and to use tight stop-losses,” Mandar Bhojane, Equity Research Analyst at Choice Broking said.

Experts also pointed out that there is rotational buying across sectors, which is helping the index maintain its positive tone despite the consolidation. However, participation from the banking sector is crucial, as it could provide the necessary momentum to drive the Nifty toward the 24,800 mark.

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