Automobile, pharma rally hits bulls’ high

"We have seen the markets go up due to rising flows in the system, as indicated by the all-time-high flows of about ₹40,000 crore in the in June," said Sumit Agrawal, senior vice president and fund manager at Bandhan AMC.

Agencies

Some Consolidation Likely Ahead | page 11
"A lot of these flows are coming into sectoral and thematic funds, and passive funds, which has led to increased fund deployment despite expensive valuations, leading the markets further up, " said Agrawal.

Investors were awaiting US chair Jerome Powell's Congressional testimony on Tuesday and Wednesday, to see his response to questions on and inflation. Powell said in his remarks to Congress later in the day that Federal Reserve faces a cooling job market as well as persistently high prices, a shift in emphasis away from its single-minded fight against inflation of the past two years that suggests Fed is moving closer to cutting interest rates.

Nifty's auto, consumer durables and pharma indices were top gainers at 1.5-2.2% on Tuesday. Stocks such as , Divi's Labs, Mahindra & Mahindra, Titan and were top gainers on the Nifty at 1.8-6.5%.

On the technical charts, the Nifty faces immediate resistance at the 24,700 zone after gaining 11.5% in a month. "Nifty and Sensex have seen a good run-up in the past one month since election results, and we think it has entered the overbought zone now," said Dharmesh Shah, head of technical research at ICICI Direct. "We may see some consolidation over the coming days and the budget announcement will be the key event to watch out for in July, which will dictate market movements."

Shah also said that June quarter earnings announcements may lead to many in the coming days.

'Invest in '

Agrawal suggested that investors put their money in sectors that have underperformed in the past few years such as financials, IT, consumption and some pharmaceutical stocks.

"Currently, largecaps are the most attractive valuation wise, and midcaps are significantly overvalued at 40-50% premium to historical averages, followed by smallcaps at 30-40% premiums. We would suggest investors to take their money out from these spaces and put it into largecaps," he said.

Nifty's Midcap 150 gained 0.27% and the Nifty Smallcap 250 rose 0.24% at the close. Out of 4,026 stocks traded on the BSE, 1,960 advanced and 1,973 declined during the day.

Fear gauge up 3.38%

On Tuesday, Nifty's India Volatility Index or VIX - the market's fear gauge - jumped 3.38% to 14.06 at close, indicating some discomfort among index options traders.

"Since we're moving to the budget session, India VIX has also shot up, in line with historical trends, and we may see a post-event cool-off in late July," said Shah.