The benchmark indices ended on a very strong note on the first day of the May series on the back of positive Asian cues and huge institution buying. The benchmark indices saw biggest single day gain since Oct 31, 2008.

The Sensex closed above the 12,000 mark while the Nifty closed above the 3650 level. Buying was witnessed across the board, IT, capital goods, metals, auto and banking stocks led this sharp rally today. The Sensex closed the day at 12,135 up 6.4% or 732 points after hitting an intra-day high of 12,161. The Nifty surged 5.1% or 180 points to settle at 3,654 after hitting a high of 3664. In the Broader indices - BSE Midcap Index was up 3.91% or 137 points and Smallcap Index closed up 3.57% or 140 points.

This was a spectacular show from the Bulls as the markets opened with a huge gap-up on strong positive Asian cues. As we were mentioning in our newsletter that if 3,520 is taken on the nifty then the next target is 3,650. And today the benchmark indices ended with hefty gains and closed above the important levels of 12,000 and 3,650.

Today’s move was in anticipation of huge short-covering and fresh buying from the FIIs as major action was seen in the Index frontline stocks. This move is once again a fresh breakout on the higher side and there is still more space left in this intermediate rally.

As Nifty is trading far away from its 200-day average of 3,375, it suggests that there is still 5-8% tick left for this rally. Even though the technical oscillators are giving us an overbought signal, we believe that the undertone is quite bullish and buying is sensible on dip.

Now for the near term Nifty faces resistance at 3715 and intra-day support is placed at 3580-3520. This intermediate uptrend could be in danger only if nifty trades below its long term 200-day moving average. Till then enjoy this uptrend.