The markets opened with a gap down and treaded lower mirroring the fall in the Asian markets. Anticipation of a gap down opening in the European markets only made matters worse. The markets hit intra-day lows immediately after the European markets opened weak.
Aggressive short-covering, along with emergence of some fresh buying in sharply battered stocks, led to a vertical upmove till the penultimate hour of trade. Thereafter, profit-booking at higher levels and apprehension of carrying forward long positions to the next trading day capped the momentum. The small decline in food inflation number against the previous week also provided some support.
Volatility ruled the roost as uncertainty over the Greece debt issues and its contagion effect on other countries added to the uncertainty.
Meanwhile, IT stocks witnessed profit-booking after yesterday's display of strong resilience while metals, capital goods, realty and power stocks continued to face selling pressure.
Though global concerns have not eased, negatives, to an extent, seem to be discounted. Global markets (especially Europe), too, can be termed as oversold to some extent if not bottomed out given the fact that they are now trading near their 200-day moving average (strong support levels). The downside thus appears to be limited unless some major adverse event unfolds.
Domestic benchmarks, too, made sharp rebounds from the day's lows and remained above the support levels by a comfortable margin. One would thus do well to keep a close watch at the long-term support levels (200-day moving average for Nifty @ 4950) and start accumulating some quality stocks that seem to have been severely battered.
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