Market in ‘consolidation phase’: Sensex, Nifty to face resistance at this level; check details

This week, Indian share market witnessed range-bound trade amid rising geopolitical tensions along the Indo-Pak border and macroeconomic uncertainty, with trends reflecting a clear consolidation phase. Bulls seem to be taking a breather following the strong rally in recent past, while investors partially booked profit at higher levels. The equity benchmarks moved in a narrow range, with the BSE benchmark Sensex holding crucial 80,000 level, and the broader NSE Nifty50 hovering around 24,300 mark.

On Wednesday, the BSE Sensex dropped 46.14 points, or 0.06%, to settle at 80,242, and the NSE Nifty50 slide marginally by 1.75 points, or 0.01%, to close at 24,334.

“This marks the sixth straight session where Nifty has failed to break past its resistance, reflecting persistent selling pressure at elevated zones and an undercurrent of caution among traders,” says Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.

Over the past week, Nifty has oscillated in a well-defined channel between 23,800 and 24,450—an important range that may dictate the upcoming trend. From a technical lens, fading upward momentum serves as a red flag, especially with the index repeatedly failing to surpass the crucial 24,500 mark, he said.

Market exhibits signs of consolidation

According to market analysts, the domestic benchmarks may see consolidation in near term, given their overbought conditions.

“Nifty continues to exhibit signs of consolidation intertwined with caution, as resistance near higher bands persists. The index seems caught in a tug-of-war between bulls and bears, with prices hovering close to upper resistances while holding firm above crucial support levels,” said Dhameja of SAMCO Securities.

Given the swift gains in recent weeks, this sideways movement appears to be a healthy breather, potentially laying the foundation for the next directional breakout, he said.

“The price action continues to show consolidation, with back-to-back small-bodied candlesticks forming on the daily chart, signifying indecision in the market. However, a broader perspective paints a more optimistic picture,” said Rajesh Bhosale, Equity Technical Analyst, Angel One.

“With daily charts are in overbought territory, the near term may see continued consolidation,” he said, adding that this time-wise correction is healthy in the context of a larger bull run, though it can be frustrating for traders due to limited opportunities.

Technically, the Nifty and Sensex are consistently facing selling pressure near the 24,450 and 80,500 resistance zone, respectively, and they also formed a double top pattern on intraday charts, which supports temporary weakness from the current levels, said Shrikant Chouhan, Head Equity Research, Kotak Securities.

He said that as long as the benchmark indices trade below these levels, the weak sentiment is likely to continue. On the downside, the market could retest the 24,000 and 79300 levels. “Further downward movement may also continue, potentially dragging the index to 23,900/79000. On the flip side, a dismissal of the 24,450/80500 level could change the sentiment. Above this level, the market could move up to 24,600-24700/81000-81300,” Chouhan added.

Elevated India VIX reflects market caution

India VIX, or the India Volatility Index, surged 4.91% to 18.22, marking a notable rise in market volatility. With geopolitical tensions and macro headwinds on the horizon, traders should brace for sudden intraday swings, says analyst at SAMCO Securities. The VIX holding above the psychological 15-mark signals an elevated risk environment, requiring tactical positioning and caution in short-term trades, he said.

Analysts recommend ‘buy the dips’ strategy

Rajesh Bhosale of Angel One said the ideal approach remains to align with the primary uptrend, ‘buying on dips’ near key supports and ‘booking profits’ near resistance zones. On the downside, immediate intraday support for Nifty lies at 24,200, while on the upside, 24550 may act as a key resistance. A decisive move above this level could trigger a fresh uptrend toward the December swing high near 24,800.

“One caveat to this constructive outlook is the ongoing geopolitical tension between India and Pakistan, which could pose risks and demand caution,” he said. The analyst advised traders to avoid aggressive overnight positions, suggesting that selective stock-picking strategy remains crucial till broader participation returns.

The overall market undertone remains constructively biased, keeping the “buy-on-dips” strategy valid as long as key support levels are intact, says analyst at SAMCO Securities. With both bulls and bears intensifying their presence near critical levels, the index appears to be entering a time-wise consolidation phase, provided it sustains above the crucial support band, he said. 

Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services, expects the market to trade in a range-bound manner with stock/sector specific action, driven by Q4 earnings announcements. Investors will watch out for U.S. manufacturing PMI and Bank of Japan’s interest rate decision tomorrow, while the Indian markets will remain closed on account of Maharashtra & Labour Day, he said.

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