The Indian stock market closed in the red for the second consecutive session on Tuesday, with Sensex and Nifty falling around 0.3% each on the latter’s monthly expiry day.

Sensex dropped nearly 250 points to end the session at 76,479, while Nifty 50 declined over 80 points to close at 23,866 on Tuesday. This came as India VIX, which measures volatility in the market, fell slightly to 13.48.

Maruti Suzuki shares were the top gainers on the Sensex, jumping more than 5% after an international brokerage upgraded its rating on the shares of India’s largest automaker to ‘Buy’ and raised its target price to Rs 16,500 from Rs 13,800, citing multiple tailwinds. Titan, Bajaj Finance and Eternal shares followed, rising 2-3%.

IT stocks, including Infosys, TCS, HCL Tech and Tech Mahindra, dropped up to 3% to lead losses on the Sensex. This came as concerns over persistent inflation fuelled expectations that the US Federal Reserve could raise interest rates at least three times this year, pushing the Nifty IT index down to a 52-week low level.

While benchmark indices lost steam, broader markets closed in the deep green. Nifty Smallcap 100 index jumped more than 1%, while the Nifty Midcap 100 index gained around 0.4%. Sectorally, the Nifty IT index dropped nearly 3% to lead losses, while Nifty Realty and Nifty Consumer Durables gained more than 1% each. Around 1,919 stocks advanced on the NSE, while 1,383 declined and 109 remained unchanged.

What lies ahead?

With Brent crude, US bond yields and the rupee stabilising, there are no major near-term triggers for the market, noted VK Vijayakumar, Chief Investment Strategist at Geojit Investments. “As we move into July, expectations regarding Q1 results will be influencing the market moves. Investors can focus on sectors which are likely to post good results,” he said.

According to the analyst, banking and financial services are likely to lead in profitability since credit growth has been strong and NIMs are good. This sector will continue to perform well. Health care is another stable sector which is likely to deliver good results. In the context of a poor monsoon, the health care sector is a strong defensive play, Vijayakumar said.

“Power is another sector which will come out with good results and healthy commentary since the prospects continue to be bright. Capital goods majors have healthy order books. For IT, more than results, the management commentary is important. Sentiments are unlikely to favour the sector. In automobiles, it will be stock-specific action,” he added.

The Nifty oscillated within the 23,850–24,050 range during the session as the NSE F&O monthly expiry took place, said Rupak De, Senior Technical Analyst at LKP Securities. “Sentiment remained slightly negative, although the index found support at the 50EMA on the daily timeframe. However, the daily RSI has entered a bearish crossover, indicating weakening momentum,” he said.

“Overall, the setup appears mixed, with significant Call and Put writing at the 24,000 strike, suggesting that this level is likely to act as a crucial pivot. Going forward, the new series may begin with the Nifty hovering around the 24,000 mark. Any meaningful move away from this level could provide clues about the index's next directional trend. If the Nifty breaks decisively below 23,800, it may witness a meaningful correction. However, if it manages to hold above 23,800, a decent recovery could unfold in the near term,” the analyst added.