The Sensex erased earlier losses and ended higher on short-covering witnessed in the last hour of trade due to Sept expiry. The Sensex closed 62 points higher at 16,781, recovering from the day's low of 16,494. Buying was seen in banking, reality and select IT stocks while auto and metal stocks were under pressure. The breadth was mix and the markets closed with one of the highest turnover in 2009 at Rs 1,43,881 cr. on settlement day. The Oct Nifty future ended at 5,002 with 15 point premium. In the September series, the markets touched a new 2009 high of 16,943 and 5,036 respectively. Both equity benchmarks closed with 6.3% gain led by banks, autos and metals.

The Sept expiry closing was very strong as the Oct Nifty future ended at 5,002 with 15 point premium and the total turnover was also highest in 2009 at 1,43,881 cr. on settlement day. The outlook for Oct series is not very enthusiastic as markets are trading at the higher range of the band and the technical oscillators are also indicating an overbought signal on the RSI. Overall the index still has strength to test the levels of around 5,250 if Nifty manages to maintain above 5,060 for quite some time.

Going ahead into Oct series we believe that Nifty has to consolidate in the range of 4,700-5,060 for some time to gather fresh momentum and give a fresh breakout on the higher side. Markets need fresh triggers at these higher levels to lift the market and this could emerge in the next quarter results.

For the very intermediate term 4,910 with be the crucial point to watch out, if this level gets broken with huge volumes then we could even test 4875-4810 where second leg of support exits. And on the higher side 5,060 should be crossed and sustained for fresh momentum to begin.

STOCK IDEA:

1) DLF (424) - Buy with a stop-loss of 417 or 412 for a short term target of 445-460.

2) ICICI BANK (860) - Huge delivery volume witnessed today, buy with a stop-loss of 845 for a target of 910.

3) TATA STEEL (513) - Buy with a stop-loss of 503, strong resistance at 518, if maintains above the point with huge volume then expect a target of 540-565.

Nifty future daily chart: The short term trend remains up unless nifty future breaks the 4,910 trend-line support as shown below. Nifty future has multiple trend-line support at 4,835 - 4,770 which will act as an important support area during this profit taking phase. These points can be used as a buying area keeping an appropriate stop-loss. On the higher side 5,055 will act as a strong resistance point, unless we see a breakout above this level fresh buying should be done on a selective basis.