Stock market: Historic highs for Sensex, Nifty today; should you buy on dips?

Stock market today: Indian stock market made historic highs on Tuesday led by a rally in metal stocks. While Sensex crossed the 85,000 mark for the first time, Nifty breached the 26,000 level on an intra day basis. Later, the 30-stock index ended 14.57 pts lower at 84,914 and Nifty ended 1.35 pts higher at 25,940. 

Market cap of BSE-listed firms stood at Rs 476.07 lakh crore in today’s session. 

Of 30 Sensex stocks, 15 shares ended in the green. Tata Steel, PowerGrid, Tech Mahindra, HCL Tech, M&M, JSW Steel and Tata Motors were the top gainers on Sensex, rising up to 4.29%. With nearly three months remaining in 2024, Sensex has climbed 17.54% this year. Nifty rallied 19.37% during the period. 

The indices saw some profit-booking today after hitting record highs of 85,163 and 26,011 for Sensex and Nifty, respectively. 

Here's a look at what analysts said on the outlook of the market and what strategy should investors adopt in the current scenario. 

Vinod Nair, Head of Research, Geojit Financial Services said, "Domestic benchmarks are attempting sustain new highs, driven by the US Fed’s aggressive rate cut. Meanwhile, the Chinese central bank’s rate cut, and additional stimulus measures have positively influenced global investor sentiment, resulting in gains for domestic metal stocks. Conversely, FMCG and banking stocks exhibited declines due to profit-booking at higher levels. In the near term, strong inflows from FIIs, driven by the US Fed’s dovish outlook and expectations of a rate cut by the RBI in October, are expected to maintain momentum."

Ajit Mishra – SVP, Research, Religare Broking said, "We maintain a consolidation view but with a positive bias, driven by rotational buying in heavyweights. Focus on stock selection and use dips to accumulate quality stocks, as Nifty holds strong support around 25,600-25,800 zone."

Commenting on the technical outlook of Nifty, Aditya Gaggar, Director of Progressive Shares said, "A Spinning Top candlestick pattern was formed at record levels which indicates indecisiveness between the bulls and bears. A strong move above 26,000 will open doors for 26,100 while on the lower side, the zone of 25,800-25,850 will serve as a strong support area"

Rupak De, Senior Technical Analyst, LKP Securities said, "The Nifty traded within a narrow range today, taking a breather after a three-day rally. The short-term sentiment remains positive, with the index staying above the critical 21-day EMA, supported by a bullish crossover in the daily RSI. However, for the rally to continue, the Nifty must decisively break above the 26,000 level. Until then, we expect range-bound movement, with the index fluctuating between 25,800 and 26,000 over the next few hours to a few days."

Shrikant Chouhan, Head of Equity Research, Kotak Securities said, "We are of the view that, the short-term market texture is still in to the positive side, but due to temporary overbought environments we could see range bound activity in the near future. For the bulls now, 25850-25800/84600-84500 would act as a key support zones while 26050-26100/85300-85500 would be the key profit booking areas for the day traders. However, below 25800/84500 uptrend would be vulnerable."