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Our market has moved up quite close to its major resistance levels. The Nifty has already tested 4930 but closed lower at 4914. It is definitely positive for sure; however, the range between 4930 and 4950 would continue to act as a strong supply zone that needs to be overcome. Within that range, the levels between 4936 and 4942 would be quite crucial for the day and staying above 4942 with good volume might indicate that this supply zone is going to be cleared. It would be great for the bulls of this range between 4930 and 4950 is cleared by a large intraday move and the close happens at a level significantly higher than 4950.

The US market continued to move up: the Dow closed at 10309 clocking a gain of 40 points; the S&P 500 gained 5 points to close at 1100. However, the Asian markets are showing mild weakness with some of them showing a loss of around 0.4% - 0.5% as we write this Market Outlook.

Our crucial deciding levels would be 4864 for the index. If the Nifty were to trade below this level it would show the first sign of weakness; yes, only after this 50-point fall you can say that the market is truly weak and not before that since till 4864 the probability of a bounce back is quite high for the bears to start rejoicing again.

Skepticism, though, rightfully springs from the F&O data with very poor volume in options transactions on a day when the index has moved up so much and there would not have been a sharp fall in open interest figures for Nifty futures. This suggests that so far the upswing is mostly short covering; however, if the Nifty were to move beyond 4950 it should happen on real buying and not just short covering. Thus, a sustained campaign above 4950 would surely indicate buying interest coming back in the market.

Rajat K. Bose