After volatile session, Indian Stock Markets bounced back smartly. Ending three days of consolidation and range-bound activity, NSE Nifty closed above its 200-day moving average of 3,392. The Sensex hit an intraday high of 11,203 before closing the day at 11,135 up 317 points or 2.93%. The Nifty ended up 2.8% or 93 points higher at 3,424 after hitting a high of 3,439 and low of 3310.

In the Broader indices - the BSE Midcap Index was up 1.48% and the Smallcap Index rose 0.94%. Buying was across the board and sectors like banking IT, metal, realty and auto stocks have led the broad-based rally today.

The markets saw a spectacular bounced back after three days of consolidation. As we had mentioned yesterday in our morning note that fresh buy is sensible only if nifty future maintains above the 3,410 level. But nifty not only managed to cross the resistance zone but also closed above the 200-day moving average.

We had also mentioned that nifty is trading in a short band of 3,300-3,420 and a move beyond this range will give a clear direction. The closing is strong and nifty April future closed with a premium of 22 points. We believe that markets are heading for a new breakout as huge buying and aggressive short-covering was seen in sectors like metals, auto, reality and banking. Our sense is that more action could be seen in these related sectors in coming days.

Now this is a second closing for nifty above its 200-day average and going forward if it sustains above 3,365 – 3,392 then we see the nifty April expiry around 3,670. The short term support is placed at 3,365-3,310 and resistance area is at 3,520.

The Reliance pack looks very attractive to buy on dips, stocks like Reliance Industries, Relinfra, Rcom and RNRL.