Stock Market: Sector Rotation Keeps Midcaps Afloat

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Markets End Lower Amid Global Weakness; Nifty Closes at 25,400 with Profit Booking in IT, FMCG

By S JHA

MUMBAI, July 3, 2025 – The Indian equity markets ended Thursday’s session on a subdued note, with the Nifty 50 slipping 48 points to close at 25,400, down 0.19%. Weak global cues, profit booking in heavyweight sectors, and cautious sentiment ahead of key economic data led to a volatile yet range-bound session, according to updates from StockEdge and Angel One.

Despite a brief early rally, the indices failed to hold gains and reversed to close near day’s lows. The Sensex also mirrored this trend, with both benchmarks showing weakness throughout the session.

Selling pressure was most pronounced in IT, FMCG, and Pharma sectors, where traders opted to book profits following recent rallies. PSU banks, metals, and realty stocks also remained under pressure.

In contrast, broader markets fared relatively better. The Nifty Midcap and Smallcap indices showed resilience, supported by select buying in oil & gas, consumer durables, and specialty chemical stocks.

The Nifty Auto Index was the day’s standout performer, breaking above a crucial resistance level. According to Angel One, this broad-based buying indicates a continuation of the current uptrend in autos, buoyed by strong fundamentals and technical momentum.

Traders are seen rotating out of overbought sectors into early-strength themes such as energy, chemicals, and durables. Stock-specific action dominated as the market remains in a consolidation phase.

Technical & Market Indicators:

Volatility remained subdued, but overall market volumes were lower than average — reflecting a cautious stance ahead of global cues and upcoming economic data.

“Technically, the Nifty is now hovering near the 78.6% Fibonacci retracement level at 25,300, a key short-term support. A decisive breach could trigger further downside toward the 20-day EMA near 23,200. On the upside, 25,500–25,600 remains a resistance zone, with a bearish gap between 25,670 and 25,740 acting as a significant hurdle,” said Angel One in its note to clients.

Most stocks in the Nifty 50 and Nifty 500 ended in the red. However, a notable number of stocks are still holding above their 50-day EMAs, suggesting underlying strength in selective counters.

Rise in open interest alongside the fall suggests fresh short positions are being built, suggesting bearish undertones for the near term.

While the near-term trend remains cautious, today’s strong Services PMI data could lend support to interest-sensitive sectors such as banking, logistics, and financial services in upcoming sessions.

Market participants are expected to stay in a wait-and-watch mode, closely tracking global markets and domestic macro indicators. With technical support holding so far and sectoral rotation offering fresh opportunities, traders are likely to remain stock-specific rather than chasing broad index moves.

(Disclaimer: This article makes no recommendation for any kind of trades in the stock market)

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