Bulls push the Sensex and Nifty higher, but analysts predict consolidation.

On December 22, during the morning session, bulls maintained their control over Dalal Street thanks to encouraging signals from worldwide markets. The two benchmarks recovered after a tumultuous trade in the preceding session, and the rise proceeded. The two main themes in the play were profit-booking and buying on dips.

But as the year-end holiday season approaches, analysts expect yet another pause in the bull run over the coming days.

“The year-end holidays will likely prevent any significant FII action in the next days, thus the momentum in the coming days is likely to be tepid. But we also don’t anticipate a lot of selling in the market because DII support is still strong and buying on dips is the underlying theme, according to Ventura Securities head of research Vinit Bolinjkar.

Additionally, analysts view the market’s minor pullback favorably, particularly in light of the exceptional run-up that has occurred this month. The market’s indication is that the steep pullback on Wednesday was a one-day occurrence rather than a reversal of the upward trend. This validates the effectiveness of the buy-on-dips approach, which has demonstrated consistency in the current rally,” said VK Vijayakumar, Geojit Financial Services’ chief investment strategist.

But he also raised concerns about the small- and mid-cap stocks’ inflated valuations. “Sustained inflows into midcap and smallcap mutual funds, coupled with retail excitement, are propelling this rise, which has entered a foamy area. This general market upswing is not sustainable.”

The Sensex increased by 231 points, or 0.33 percent, to 71,096.5 in the first hour of trade, while the Nifty gained by about 86 points, or 0.40 percent, to 21,340.70. Gainers were also aided by the market’s breadth, as almost four equities increased for every one that declined.

Strong buying was also seen in the broader market, as evidenced by the roughly 1% gains made by the Nifty Midcap 100 and Nifty Smallcap 100.

Technically speaking, Choice Broking research analyst Deven Mehata predicted that the Nifty 50 would first see resistance at 21,400 and then 21,500. Should there be a pullback, he anticipates that the headline index would find support at 21,200, then 21,150, and 21,100.

All sector indices saw gains in trading, but the Nifty Metal index was the standout performer, climbing 1.5%, mainly as a result of the dollar index dropping below 102.

Pharma, real estate, and the auto industry saw robust buying activity as well; each of the three sectoral indices increased by more than 1%. The session saw modest advances for banking equities as well.

According to the Bank Nifty’s charts, support might be seen at 47,750, 47,600, and 47,500. The first significant resistance level, if the index rises, would be 48,000, then 48,100, and 48,220 “Mahata stated.

For the long position, he advised investors to trade with a strict stop-loss at 47,500.

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