Indian Stock markets closed on Monday at 16845 levels with a gain 281 points while Nifty closed well above 4900 levels with a gain of 94 points. Investors are happy to see the Market Indices offering positive surprises during every rally while Funds are buying stocks as Indian market still looks promising among emerging markets.

Indian stock markets have offered more returns compared to other emerging markets and Indian companies are showing good performance every quarter.

Technical analysts expect correction is markets as the BSE Sensex has gained nearly 1000 points very quickly. The markets may test the levels of 17,000 very soon, but a correction could be around the corner. Corrections are healthy for markets and after every correction, there is fresh buying and new investors enter stocks at new levels. The markets can move more strongly after a correction as investors spend their money on value stock picking.

The recent rally started after the Fed-rate cut and market gained nearly 350 points on the next day of announcement. As the Futures and Options for the month of September are near, the technical analysts believe that a correction is quite likely.

Reliance was among major gainers in the market. The stock touched an intra-day high of Rs 2,375 as the company informed that Reliance found Oil in Krishna Godavari basin.

ICICI Bank, HDFC Bank and SBI were major gainers in banking sector. ICICI has announced that the bank will promote private banking and wealth management services in smaller cities across India.

Some Technical Analysts offer a word of caution as the markets have gained more than 1000 points in a few trading sessions. Shahina Mukadam of IDBI Capital said, “It is highly unlikely for the Sensex to touch 17K this week. In fact, we have set a 1-2 month timeframe for the milestone.”

In select counters, short covering was also witnessed as the September Futures expiry is coming soon. The markets may touch 17,000 and after that there could be sharp downside of nearly 400 – 500 points.