Day Two of the pullback was equally impressive. Wednesday was an important session as the market needed to prove that Tuesday’s rally was not a one-day wonder. More so as we had had a similar rally last week, which got sold into. But the market was rock solid on Wednesday and every attempt on part of the bears to claw back was warded off convincingly. There were pockets when the Nifty looked like it was slipping but every time stocks managed to bounce back. The Nifty finally closed above 4,240--a closing that will please the technical traders. That this happened on a higher trading turnover of Rs 55,000 crore, with good market breadth, is even more reassuring.
Now the Sensex is within 300 points of its all-time high. This with no help from technology stocks, which account for a fifth of the index weight. Banks have led from the front, particularly heavies like State Bank of India and ICICI Bank. Interestingly, some underperforming sectors like automobiles and cement have started showing signs of life. Gujarat Ambuja’s bounce was impressive on Wednesday and even Tata Motors witnessed some accumulation. That traders have got back into the game is evident from how mid-caps moved. Stocks like Voltas, Punj Lloyd, IDBI and India Infoline made significant high-volume moves.
Indeed, this is shaping up like a very interesting recovery, coming as it has amid consensus expectations of a deeper correction. Now whether this can continue once the shorts have been fully covered remains to be seen. Last time the Sensex stalled as it approached all-time highs. Let us see if the second coming is strong enough to take it past that level. That is the next frontier to watch as the June derivatives series readies for settlement.
The writer is Executive Editor, CNBC-TV 18