D-Street snaps 4-session gaining streak amid profit booking in realty, auto space; mid-, small-cap stocks shine

Indian equity market started the week on a weak note, with the benchmark indices falling over 0.5% as investors took some breather following the recent rally. The BSE benchmark Sensex and NSE Nifty50 witnessed profit booking at higher levels, led by private banks, realty, and auto stocks. However, the broader market continued to show resilience in expectation of better earnings driven by consumption and margin expansion.

The BSE Sensex lost 452.44 points, or 0.54%, to settle at 83,606.46 levels, while the Nifty50 dropped 120.75 points, or 0.47%, to close at 25,517. In the broader market, the Nifty Midcap100 and Nifty Smallcap100 indices rose 0.68% and 0.52%, respectively.

On the sectoral front, rate-sensitive and consumption-heavy sectors, such as realty, auto, FMCG indices ended in red zone, while PSU banks emerged as top performers. The Nifty PSU Bank index rallied 2.7%, while defensive counters like Pharma and IT saw marginal buying interest, each adding 0.5%. Media and healthcare also ended in the green.

On the flip side, Nifty Realty declined 0.74%, Auto dipped 0.56%, and FMCG stocks also came under pressure with index down by 0.41%.

Among the Sensex constituents, 18 out of 30 stocks settled in the negative terrain, led by Axis Bank , Kotak Mahindra Bank, Maruti Suzuki India , UltraTech Cement , and Bajaj Finance , falling in the range of 1-2%. Among others, Reliance Industries , ICICI Bank, Tata Steel , NTPC , HDFC Bank , and Bharti Airtel were notable losers.

On the other hand, Trent, State Bank of India , Bharat Electronics , Eternal (Zomato) , Adani Ports were among top five gainers, rising between 3.3% to 0.7%.

According to Ajit Mishra – SVP, Research, Religare Broking, some profit-taking in the index is natural after a strong uptrend, but trading opportunities remain abundant on the stock-specific front. “We continue to advocate a “buy-on-dips” approach, with a strong emphasis on selective stock picking.”

Focus shifting to quarterly earnings

Amid easing risks in the Middle East and hopes of a trade deal with the U.S., investors are now turning their attention to quarterly earnings and will refocus the markets on fundamentals for valuation support, said Vinod Nair, Head of Research, Geojit Investments.

Ajit Mishra said that his preference remains with the rate-sensitive sectors—namely banking, financials, auto, and realty—while he advised selective exposure to other sectors. “Notably, the ongoing strength in the broader indices is creating additional opportunities, but participants should stay cautious and limit positions to the fundamentally-sound counters only," he said.

Trends indicate temporary weakness

Technically, a bearish candle on daily charts indicates temporary weakness, but the short-term market outlook remains positive, said Shrikant Chouhan, Head Equity Research, Kotak Securities. “We believe that 25,470/83500 will act as a key level to watch for the Nifty and Sensex, respectively. Below 25,470/83500, we could see a further correction towards 25,375–25,300/83200-83000. On the flip side, a sustained move above 25,470/83500 could push the market up to 25,600/83900. Further upside may also continue, potentially lifting the market to 25,700/84200.”

Rupak De, Senior Technical Analyst at LKP Securities, said the Nifty index has formed a bearish engulfing pattern on the daily timeframe, indicating fatigue in the ongoing market rally. In the near term, the index may enter a phase of consolidation. “The short-term trend is likely to remain sideways before any decisive directional move. On the downside, a decisive fall below 25,500 could trigger a correction. On the upside, resistance is placed at 25,600 and 25,800."

Meanwhile, Bank Nifty saw minor pullback, but maintained a higher high–higher low formation, suggesting a phase of time-wise consolidation amidst stock-specific traction, Bajaj Broking said in a note. “The index is currently perched above its immediate support zone of 57,000–56,800. Sustaining above this demand zone will keep the short-term bias constructive, paving the way for a potential move towards 58,500 — a level derived from the measured move projection of the recent consolidation band between 56,000 and 53,500.”

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