Stock Market Prediction Today: Sensex, Nifty likely to stay volatile ahead of RBI MPC; experts see buy-on-dips opportunity – Key levels to watch on August 5 – Markets

Indian benchmark indices are expected to remain volatile but retain a positive undertone on Wednesday, August 5, as investors look for the decisions of the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC).

Technical analysts believe the decline on Tuesday was largely a result of profit booking after the recent rally rather than the beginning of a fresh downtrend, with both the benchmark indices – Sensex and Nifty – continuing to trade above key support levels. They expect the next directional move to hinge on whether the indices hold these crucial technical levels.

Sensex, Nifty at close on Tuesday, August 4

Snapping the four-day gaining streak, benchmark stock indices Sensex and Nifty closed lower on Tuesday following the introduction of a new auction mechanism for shares having futures and options (F&O) contracts.

The 50-share NSE Nifty closed lower by 159.40 points, or 0.64 per cent, at 24,614.90 after trading in the negative territory throughout the day. During intraday trade, it edged lower by 346.35 points, or 1.39 per cent, to hit a low of 24,427.95.

Market benchmarks traded on a mixed note in the early session on Tuesday, a day after the introduction of the new auction mechanism. Sensex and Nifty on Monday ended with an unusual aberration after stock exchanges introduced the new auction mechanism.

The NSE recorded a turnover of Rs 1,542.2 crore on the second day of the closing auction session on Tuesday, while the turnover on the BSE stood at Rs 9.35 crore. On Monday, the initial trading turnover was Rs 1,276.2 crore for the NSE.

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. Generally, movement in both the benchmark indices is in sync.

SEBI-registered analyst Vipin Dixena said the Sensex is currently testing crucial support around 78,200, which also coincides with the 50-day exponential moving average (EMA), indicating that the broader short-term trend remains positive despite the recent profit booking.

RSI has cooled to around 50, reflecting neutral momentum after easing from overbought levels.

According to Dixena, if the Sensex sustains above 78,200, it could trigger a fresh recovery towards 78,700, and a decisive breakout above this level may open the doors for an upmove towards 78,900–79,000.

“However, if Sensex slips decisively below the 50 EMA and 78,200, selling pressure could intensify, dragging the index towards the 78,000–77,900 zone. Investors are likely to remain cautious ahead of tomorrow’s RBI MPC policy decision,” the analyst added.

Hitesh Tailor, Technical Research Analyst at Choice Equity Broking, said the Sensex has formed a bearish candlestick on the daily chart after facing profit booking following a sharp gap-up opening.

Tailor said, “The BSE Sensex ended the session at 78,428.95, down 210.08 points (-0.27%). The index opened at 79,132.97 with a sharp gap-up and touched its intraday high of 79,143.15 within the opening minute. However, the benchmark witnessed steady profit booking throughout the session, slipping to an intraday low of 78,211.87, before recovering marginally to close at 78,428.95.”

He further stated the index slipped below its 200-Day EMA, reflecting rejection near higher levels, although it continued to hold above its 20-Day, 50-Day and 100-Day EMA, suggesting that the short-to-medium-term trend remains positive.

Immediate support is placed at 77,700–78,000, while 78,900–79,200 remains a key resistance zone, Tailor said.

Sector-wise, Capital Goods, Metals, Industrials, Commodities and Consumer Discretionary outperformed the broader market. On the other hand, Financial Services, Private Banks, Information Technology, FMCG, Energy and Realty witnessed profit booking, while Healthcare remained largely stable, resulting in a mixed sectoral performance, he further stated.

“Overall, the broader market structure remains constructive, but today’s rejection near the 200-Day EMA indicates that the index may consolidate in the near term. A decisive close above the long-term moving average would strengthen the bullish outlook, while sustained buying above key support levels will be essential to keep the positive bias intact,” Tailor concluded.

On the Nifty, Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, said a reasonable negative candle was formed on the daily chart on Tuesday after the long bull candle of previous session. “This market action indicates a healthy downward correction after a stellar rally of few sessions. Hence, this correction could be short lived,” he believes.

“After witnessing a sharp breakout of the crucial hurdle around 24400 levels on Monday, Nifty reversed the four sessions winning streak on Tuesday, as it slipped into decline to close the day lower but, erased partial loss towards the end during CAS-losing auction session,” Shetti stated.

The near-term uptrend of Nifty remains intact and any further weakness down to the previous breakout area of 24400-24300 levels could be a buy on dips opportunity as per the concept of change in polarity. Immediate resistance is placed at 24700, the analyst stated.

Sachin Gupta, VP – Research, Technical Research, at Choice Broking Private Limited, said Nifty closed at 24,614.90, down 159.40 points, after witnessing profit booking, but a sharp rebound during the closing auction session helped the index recover nearly 150 points from the day’s low.

“Indian equity benchmark Nifty 50 ended the session on a weak note, closing at 24,614.90, down 159.40 points (-0.64%), after witnessing profit booking following the recent rally. The index opened with a 71-point gap-down at 24,703, which also marked the day’s high, and remained under selling pressure for most of the session before slipping to an intraday low of 24,427.95. However, a sharp 150-point rebound during the closing auction session lifted the index from its intraday lows, helping it settle well above the day’s bottom and form a long lower wick on the daily candle, indicating support at lower levels,” Gupta said.

Despite the corrective session, he said Nifty continues to trade above all its key moving averages, suggesting that the broader bullish structure remains intact.

From a technical perspective, the RSI stands at 61.77, indicating that momentum remains positive despite the day’s weakness. “As long as the index holds above the 24,350–24,400 support zone, the broader trend is likely to remain constructive, although some consolidation may continue after the recent sharp rally. Immediate resistance is placed at 24,750–24,800, and a sustained breakout above this zone could revive bullish momentum. The expected trading range for the next session is 24,350–24,800,” Gupta added.

The Nifty PCR stood at 1.11, reflecting a balanced-to-positive derivatives setup despite the corrective session. Meanwhile, India VIX rose to 12.19, indicating a slight increase in market volatility and a cautious undertone among traders. Sector-wise, Nifty Media, Metal, and PSU Bank emerged as the top-performing sectors during the session, while Nifty Realty remained the weakest performer amid continued profit booking, Gupta concluded.