Nifty tops 24,600, Sensex snaps 3-session losing streak; cooling volatility supports

Nifty 50 and Sensex snap a three-day losing streak in trade.

Dalal Street held firm in the green, snapping a three-day losing streak, on June 4, as an uptick in auto, IT and PSU banks helped investors regain momentum.

At close, the Sensex was up 260 points or 0.32 percent at 80,998, and the Nifty was up 77 points or 0.32 percent at 24,620. Market breadth was positive as around 2010 shares advanced, 1844 shares declined, and 139 shares unchanged.

Investors are placing their bets on the broader end of the markets as mid-cap and small-cap stocks rally. While the Nifty Midcap 100 index has rallied half a percent, the Nifty Smallcap 100 jumped 75 basis points in the afternoon session.

Among sectors, there is some broad-based buying in media, PSU Bank, IT and auto indices, while realty and oil and gas stocks remained under pressure.

According to experts, the markets are likely to continue their consolidation phase, remaining within that key 24,000 to 25,000 range. However, market analysts have added that a breakout above 25,000 appears more likely than a drop below 24,000, barring any unforeseen events.

The India VIX index slipped 4.9 percent to 15, indicating cooling volatility and nervousness in the markets.

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Defence equipment makers have seen a significant rally in recent days, as geopolitical tensions have increased their orderbook visibility, with the combined market capitalization of the defence index rising by Rs 9,000 crore in this week alone.

It’s also been block deal mania on Dalal Street today, with Indegene, Motilal Oswal, Aditya Birla Fashion, Tata Technologies, along with Aklem Labs seeing large stakes exchange hands in trade, as promoters and investors book profits. The reaction to the blocks have been mixed; ABFRL and Indegene shares are languishing in the deep red, while Motilal Oswal shares are celebrating in the green.

Markets are also closely eyeing the RBI and all rate cut sensitive stocks as the central bank is likely to trim the key benchmark lending rate by 25 basis points on Friday. Cooling inflation, strong domestic growth, along with solid fundamentals are likely to contribute to the RBI’s decision to trim its interest rate.

"We believe that the intraday market trend is weak, but a fresh sell-off may only occur if the index breaches the level of 24,450. If this level is broken, the index could decline to between 24,350 and 24,300," said Shrikant Chouhan, Head - Equity Research, Kotak Securities. '

He added, "On the upside, if the index rises above 24,650, a quick pullback rally toward the 20-day SMA of 24,700 could happen. Further upside potential may also exist, possibly lifting the market up to 24,800."

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