The markets showed smart recovery and stability after yesterday's steep fall due to the budget disappointment.

The Sensex gained 127 points to close at 14,170, after hitting a day's high/low of 14,251 and 14,000 respectively. The

Nifty closed at 4202 up 0.88% or 36 points, after seeing an intraday high of 4231 and low 4155 respectively. The

market breadth was flat and the cash volumes dropped heavily compared to previous session. Huge buying was

seen in buying cement, auto and telecom stocks. Even select buying was seen in technology, FMCG, capital

goods, private banking and select power stocks. However, selling was seen in select oil & gas and metal stocks. The

July Nifty future ended with a 9 point discount at 4193.

The markets have shown strong stability after yesterday's sharp fall. The intermediate trend still remains cautious but

today's closing was strong and one can look for an immediate bounce upto 4300-4385. Strong support at lower

level is placed at 4110 & 4050 which should be maintained from a closing point. A fall below this level gives us a

sharp decline upto 3950-3850 and even 3730.

The technical oscillators are still giving a negative divergence but nifty is holding the 50-day moving average of

4170 on a closing basis which is a good sign. Going forward nifty has to sustain above 4270-4330 to regain more

strength or else these rallies will be short-lived. For intra-day support for nifty exits at 4170-4110 and resistance is at

4270-4330.

Nifty Future Daily chart: (4191) - The trend still remains weak but the last hope is that nifty is still holding 4110 & 4050.

If this point is broken then we may witness sharp falls. Markets will consolidate for some time in the region of 4400-

4100 after yesterday's steep fall. There is a possibility that nifty could touch 4300 in coming days but stability above

this level is important for further uptrend.