Nifty has closed highest above 4,900 since May 28, 2008. Positive global cues also remained supportive for the benchmark indices. The BSE Sensex has touched an intraday high of 16,700, before closing at 16,677 up 222 points. The Nifty index rose 1.36% or 66 points to settle at 4,958 after hitting an intraday high of 4,966. Among the broader indices - the BSE Midcap Index was up 1.45% and Smallcap Index up 1.1%. Huge Institutional buying was witnessed in banking, metals and auto stocks which gave a strong pushback for the market. All sectoral indices ended higher. The market breadth was strong and the volumes increased further, total traded turnover was at Rs 96,125 cr. as against Rs 90,254 cr.

The markets have broken out of a consolidation phase suggests that a short term still remains UP. The pick-up in volumes and positive breadth is also an encouraging development. The daily oscillators RSI is at 70 which are close to the overbought zone and going forward we believe that one should remain bit cautious in buying into high beta stocks.

Sectorally it would be wise to buy into defensive stocks. Capital goods and Cement sector has not participated in this entire rally and going forward we could see these sectors accelerating. Markets are totally driven by liquidity which is keeping the momentum going, once the liquidity fizzle out then we could see some slowdown and sideway movements.

In the short run 4,990 will act as a strong resistance area from where we could see some selling pressure emerging and it would be very important for the Nifty to maintain above the 5,000 mark with huge volume to hold the current momentum. And on the down side 4,780 is the area to keep a watch-out, a break below could weaken the current uptrend. On the higher side if Nifty breaks maintains above 4,990 with huge volumes then 5,060 is the immediate target.

Our sense is that around 5060-5110/17000-17150 market participant should liquidate their holdings and wait for the correction to re-enter.

STOCK IDEA:

1)  ACC (801) – Buy with a stop-loss of 787, counter showing sign of revival if sustains above 815 then look for a short term target of 840.

2)  ESCORTS (84.50) – Buy and hold with a stop-loss of 79 if maintains above 87, then look for 90-94.
 
3)  GMR INFRA (140) – Buy with a longer time horizon, stop-loss 132 if sustains above 144 then we could witness strong buying emerging. Short term target looks 157-165.

4)  INDIAINFOLINE (140) – Buy with a longer time frame, stop-loss 132 or 127 resistance at 145, if maintains above then look for a target of 160.

NIFTY FUTURE DAILY CHART: The trend continues to remain up but from a very shorter term retracement 4,780 remains a very strong support area. Unless Nifty breaks this point we don’t see any weakness entering into the system. The upside continues to remain intact. On the higher side 4,935 is the 50% retracement area, if nifty maintains above and consolidates for some time then next level is 5,260 in the medium term as shown below.