Yesterday's close was a very positive one for the bulls. The ease with which the Nifty shrugged off morning volatility to close above 4,500 was quite impressive. There may be scepticism in the market but the bulls still have the upper hand. They are not letting go of this up-trend easily.
Interestingly, it was the second time in a fortnight that most global markets “decoupled” from the US. The Dow had a scare on Wednesday but Asia dealt with it very well and India did particularly well. Whether yesterday's move marks the end of this week's consolidation phase, we will know today. It certainly bodes well for a market within striking distance of an all-time high.
The Nifty futures discount shrank sharply from 40 to 15 points in late trade. There was evidence of some long accumulation there and a touch of short covering. Maybe the bears, anticipating a topping out of the seemingly tired index, were caught on the wrong foot.
While buying continues in the stronger sectors: power and infrastructure, led by the likes of Reliance Energy, ABB, PFC, GMR and Praj, some of the underperformers are witnessing steady accumulation. Ranbaxy is above 400 after quite a while and Hero Honda is being nibbled at. Sadly, techs are still comatose.
So far, so good. Now, we need to get over the FOMC meeting hump and start looking forward to earnings and basics. If we can get past the 18th without any shocks, then the market has a fair chance of trading well above old highs.
A large number of people are expecting another big dip, maybe the market will not offer them that luxury. This may not be the time to be ultra bullish but the screen is not showing you much to feel very bearish either.
(The writer is Executive Editor, CNBC-TV 18)