Nifty, Sensex snap 4-day winning streak; market in overbought zone, say analysts

Healthcare, metal, PSU Bank, oil & gas, realty indices fell up 0.5-1 percent, while bank index was down 1 percent and capital goods index shed 0.3 percent.

Benchmark indices gave up all intraday gains on June 28 to end in the red amid high volatility. While the market trend is still positive, analysts believe that corrections cannot be ruled out since the market is in the overbought zone and domestic investors are booking profits.

At close, the Sensex was down 229.51 points or 0.29 percent at 79,013.67, and the Nifty fell 35.20 points or 0.15 percent at 24,009.30. About 1,961 shares advanced, 1,427 declined, and 70 were unchanged.

"The elevated valuations in the market continue to be a concern. But the market is not yet in bubble valuation territory. The weak trend in the broader market is likely to continue," said said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Investors can consider booking partial profits in the mid and smallcaps and move the money to fixed income, he added.

Markets headed for consolidation?

Looking ahead, there's a possibility of consolidation in the benchmark index following recent upward movement, with support expected around the 23,700-23,900 range on any declines, said Ajit Mishra – SVP, Research, Religare Broking.

Banking stocks are currently consolidating, while sectors such as IT, energy, and FMCG are buoying the index higher. "Similar market dynamics are anticipated in the upcoming session, so traders should strategize accordingly," he said.

Technical view

The sentiment for Nifty continues to remain strong as the index closed significantly above the critical moving average. However, after a continuous rally, the index looks a bit heavy and might attract profit booking if Nifty sustains below 24,000, according to Rupak De, Senior Technical Analyst, LKP Securities.

"On the lower end, the index might fall towards 23,850/23,700 in the short term upon a decisive fall below 24,000. On the higher end, resistance is visible at 24,200," he said.

Bank Nifty index experienced its first meaningful correction after a nonstop rally in the past week. For the selling pressure to continue, there needs to be follow-up selling; otherwise, the index may get stuck in a consolidation range, said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

"The immediate support is at 52000, where the highest open interest is built up on the put side, while the immediate resistance lies in the 52700-53000 zone," Shah added.

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