Sensex jumps 410 pts, ends near 81,600; Nifty tops 24,800; what's next?

In a day marked by significant market fluctuations, the Nifty index rose by 130 points, while the Sensex increased by 410 points. Shrikant Chouhan, Head Equity Research at Kotak Securities, noted that "the benchmark indices experienced a volatile trading session," with the defence sector index seeing the most substantial gains, rallying over 3.5%.

The trading session's volatility did not deter broader market positivity. Ajit Mishra of Religare Broking commented, "Markets traded volatile but managed to end with gains of over half a percent, taking a breather after the recent decline." The Nifty closed at the 24,813.45 level, buoyed by buying interest in heavyweight stocks.

Most major sectors aligned with the overall market trend, with realty, pharma, and financials emerging as notable gainers. Mishra highlighted the positive breadth of the market, stating that all major sectors moved in tandem with the benchmark.

Technical analysis by Chouhan revealed that the indices now face resistance near critical levels of 24,950 for Nifty and 82,000 for Sensex. The two indices managed to close above the 24,650 and 81,200 marks, which he described as "largely positive."

Further insights from Chouhan pointed to a range-bound market, suggesting that as long as the indices trade between these levels, the market will remain stable. A breakout above 25,000 for Nifty and 82,200 for Sensex could push the indices higher, while a drop below 24,650 could lead to an accelerated correction.

Market sentiment, however, was tempered by uncertainties around India-US trade negotiations and the recent downgrade of the U.S. credit rating. Vinod Nair of Geojit Investments remarked that although the markets had a "broadly positive undertone," sentiment remained narrow, hinting at a "sell on rallies" strategy.

Amidst these dynamics, Mishra advised focusing on stock selection based on relative strength. He identified pharma, realty, metals, and banking as key sectors. "Dips should be seen as an opportunity to gradually accumulate quality stocks," he added. He also emphasized the importance of monitoring global economic indicators and being prepared for potential shifts in market sentiment.

The market also witnessed significant open interest activity in stocks such as Dixon, Titagarh, and Torrent Pharma. Sundar Kewat from Ashika Institutional Equity noted a cautious Put-Call Ratio of 0.64, reflecting a balanced sentiment.

Kewat highlighted that the Nifty options front showed notable call open interest build-up at the 25,000 strike, with the highest put interest at 24,700 and 24,000 levels. This positions the market within a cautiously optimistic framework as it anticipates future moves.

Overall, while the market recorded gains despite the day's volatility, analysts suggest that the coming sessions will require careful stock selection and vigilance towards global economic cues, especially in light of the upcoming Fed policy meeting. The interplay between domestic factors and international developments will likely dictate the market's trajectory in the short to medium term.