We saw that the Nifty opened with an upside gap in the morning session at 5320 levels. After that the markets gained further strength and was trading at the 5390 levels. There after, the afternoon session saw some sideways movement for our markets and the markets consolidated in the 5385-5410 levels. But, towards the closing session the markets again had a strong upward move and was trading higher at 5470 levels.Hence, the Nifty closed very strong for the day at 5474, (5.59%) above its previous close. The advance: decline ratio was also very strong at 987:157.

The American Markets have closed very strong. The Asian Indices are trading at higher levels. We can also expect a positive opening for our markets and initially test the upward resistance at 5550 levels. But, later on we can expect some consolidation in the afternoon session and close flat to slightly positive for the day. We can see that the markets have closed very strong today at 5474 levels today. We can also notice on the medium term daily charts, that the 38.2% retracement from the 4002 lows made on 17/8/2007 to the 5736 highs made on 18/10/2007 is 5070 levels. In very strong bull markets, it is very common for the prices to retrace to 38.2% levels. Hence, our markets have now firmly bounced back from this support at 5070 and is currently trading, above the medium term 23.6% retracement, which is at 5320 levels. But, as this bounce back has come very sharply in a single day we can expect the markets to slightly consolidate to the 5320-5350 levels in the short term.

The BSE MidCap Sector Index closed at 7556 levels today, which is (4.03%) above its previous close. We can also notice that we had a very strong market breadth today, indicating that most of the midcap stocks have made very strong gains today. Hence, we expect this sector to move upto higher levels of 7700 in the short term. We like Torrent Power and Patel Engg. in this sector.

Click here to download full report

Reliance Money Disclaimer