The benchmark index extended its winning streak to the fifth day and ended flat as profit-taking erased earlier gains. The Sensex advanced 33 points to close at 16,216 after trading between 16,434 and 16,166. The Nifty ended with just 5 points gain at 4,819 after shedding 69 points from day's high of 4889. Metals, banking and IT stocks posted gains today, realty and auto counters ended lower. The volumes were very high, total traded turnover was at Rs 1,01,849 cr. as against Rs 78,551 cr. and the market breadth was also negative. The Sept Nifty future ended with 15 points discount.

This is the fifth strong going day for the markets and they were well holding above the important Fibonacci retracement level of 61.8%, which are 4,775 for the Nifty and 16,035 for Sensex. The trend is strong and very constructive but one has to remain cautious at higher levels as huge sell-off cannot be ruled out.

The current strategy one should choose is buying into defensive sectors like Healthcare and Power. The main reason is these sectors have not participated in the rally and chances of outperforming are high. Avoid high momentum sectors like reality, auto, OMC where profit taking can be seen at higher levels going forward. Even buying midcap and smallcap at this point should also be avoided as we are seeing focus getting shifted to the main frontline stocks.

In the minor term support for nifty continues to remain at 4780 if this level is broken then we could see some selling pressure emerging and nifty might test 4720 or 4680. And in the slightly intermediate term support exits at 4560, unless nifty breaks below 4560 with huge volume this trend is safe and every dip is a buying opportunity. Resistance is at 4900; if this level is breached with positive market breadth and huge volumes then the next target is 5050-5200.
 
STOCK IDEA:

1) DR. REDDY (821) - Huge delivery volume witnessed in the counter, stock is giving an evidence of a strong breakout, buy with a stop-loss of 790, the stock has been in a continuous uptrend, in the medium term support exits at 740 which is closed to its 50-day moving average. Short term target looks 910.

2) SHIV-VANI OIL (360) - Buy and hold with a stop-loss of 335, counter showing sign of revival, if maintains above 380 then look for a target of 405.

3) UNITED PHOSP (171) - Buy and hold with a longer time horizon, support exits at 160, this stock has been consolidating for a while, if maintains above 175-180, then look for target of 193-210.

NIFTY FUTURE DAILY CHART: The trend continues to remain Up as markets are well placed above their support level of 4695 as shown below. It's very important in the near term that nifty holds this point and consolidates for the next target of 5050-5110. Short term support is placed at 4695-4610.