Stock Market Prediction Today, August 6: After the domestic equities ended marginally higher on Wednesday despite a volatile trading day, the benchmark indices BSE Sensex and NSE Nifty are expected to remain in a consolidation phase on Thursday, August 6, with technical analysts maintaining a positive bias and advising investors to use any dip as a buying opportunity.
The 30-share BSE Sensex rose by 152.05 points, or 0.19 per cent, to end at 78,581 with 17 of its constituents closing with gains, 12 with losses and one unchanged. The index opened higher and hit a day’s high of 79,055.38 in the first half of the session. However, the index slipped into the red in the late afternoon session, hitting a low of 78,285.74 by losing 769.64 points. Gains bluechip banking, auto and capital goods shares in the pre-close session helped the barometer recover from losses.
The 50-share NSE Nifty edged up 9.75 points, or 0.04 per cent, to end at 24,624.65. It hit a high of 24,677.60 and a low of 24,497.95 during intraday trade.
The indices have been facing wide divergence since Monday after stock exchanges introduced a new auction mechanism for shares having futures and options (F&O) contracts.
The Closing Auction Session (CAS) in the equity cash segment became operational on Monday, introducing a new auction-based mechanism for determining the closing prices of eligible stocks in a move aimed at making the price discovery process more transparent and robust.
Market analysts note that after recent rapid rallies, short-term consolidation is healthy and creates fresh entry opportunities for traders on dips.
“After witnessing a stellar upmove recently, the Nifty seems to have shifted into minor profit booking from the highs in the last couple of sessions. But the recently introduced late session CAS (closing auction session) has witnessed sharp uptick in Nifty towards the end there by erasing the loss completely and closing in the green on Wednesday,” Shetti said.
According to Shetti, after a decisive breakout of crucial overhead resistance of 24300-24400 levels few sessions back, the market is currently retracing down towards the previous breakout area. This lower base could be a buying opportunity as per the concept of change in polarity.
“The near-term trend of Nifty remains positive. Any upside from here could find overhead resistance around 24800 levels. However, further weakness from here could find support around 24400-24300 levels for a bounce back,” he added.
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Nifty daily chart – Wednesday, August 5
Technically, Nifty formed a small-bodied candle on the daily chart, signalling consolidation after the recent rally while continuing to trade above key short-term moving averages. The Relative Strength Index (RSI) strengthened to 61.96, suggesting bullish momentum remains intact, Tailor said.
“Indian equity benchmark Nifty 50 ended the session at 24,624.65, up 9.75 points (+0.04%), after a volatile yet range-bound trading session. The index opened with a gap-up of around 53 points and marked its intraday high of 24,677.60 during the opening minutes,” he stated.
However, Tailor said the early gains were short-lived as sustained profit booking dragged the index lower through most of the session, with Nifty slipping to an intraday low of 24,497.95 before recovering modestly to close near the opening level. Intraday price action reflected selling pressure at higher levels, while support near the 200-Day EMA on the 5-minute chart attracted buying interest, limiting further downside, he added.
Sector-wise, Metal, Auto, Realty, PSU Bank and Cement witnessed buying interest, whereas Media, Banking, IT, FMCG and Pharmaended under pressure.
Tailor noted that India VIX declined to 12.06, reflecting easing market volatility. “In the derivatives segment, the PCR improved to 1.15, indicating a bullish undertone. Significant Call Open Interest was concentrated at 24,600–24,700, while Put Open Interest remained strong at 24,600–24,500, highlighting immediate support around current levels,” he said.
He expects immediate support is placed at 24,400–24,450, while 24,750–24,800 remains the key resistance zone for Thursday’s trading session.
For the Sensex, Tailor believes the benchmark is undergoing a healthy consolidation after recent gains.
Price action indicates that Sensex continued to consolidate near the 200-Day EMA after recent gains. The index traded in a narrow range with buying interest emerging at lower levels, highlighting a healthy consolidation phase rather than aggressive profit booking, he said.
Tailor believes the immediate support is placed at 77,800–78,100, while 79,000–79,300 remains the key resistance zone. “A sustained move above this hurdle could strengthen the ongoing recovery, whereas the support zone is expected to attract buying interest on declines,” he said.
Sector-wise, Consumer Discretionary, Auto, FMCG, Financial Services and Healthcare led the gains. Commodities, Industrials, Metals and Private Banks also ended in the green, while Information Technology remained largely unchanged and Telecom underperformed.
From a technical perspective, Sensex continues to trade above its 20-Day, 50-Day and 100-Day EMA, while remaining below the 200-Day EMA, indicating that the short-to-medium-term trend remains constructive, although a decisive breakout above the long-term moving average is still awaited. The RSI has strengthened to 61.13, remaining above the midpoint and signalling sustained positive momentum, Tailor stated.
“The broader market structure continues to favour a sideways-to-bullish outlook. As long as key support levels remain intact, the prevailing trend is expected to stay constructive, with a buy-on-dips approach likely to remain the preferred strategy for traders,” he concluded.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
