Weak cues from Asia, and poor results from TCS triggered volatile trade at the markets. The indices recover to close in the green by the end of trade. The Nifty closed at 5,049 up 12 points, while the Sensex shut shop at 16,784 up 45 points.

Manishi Raychaudhuri, ED, UBS Securities, feels it is still possible to make significant returns from the IT sector.

He feels it is difficult to take a short-term call on the market. “Bounces in the market can last 15-20%. The Sensex can go up to 17,000-17,200 from current levels. However, domestic concerns are likely to persist for sometime. Steps to curb inflation to continue, and will limit the rally."

According to Raychaudhuri, the 2008-end Sensex target has been revised lower to 19,600 from 22,600. “The lowered Sensex target factors in lower valuations. About 13-14% of Sensex target is from embedded value. We see a CAGR Sensex earnings of 22% over 2008-10.”

Rajesh Jain, Director and CEO, Pranav Securities, said the market doesn’t seem to be revealing a tendency to take big calls or to start fresh big positions ahead of the expiry. “The markets are in a fairly safe zone. We have held on to the 5,000 mark on the Nifty very convincingly. Once we are out of the F&O expiry, then you would see a particular trend merge. There are chances that it could chalk out another 300-350 point gain on the Nifty, after which you could see profit taking or even fresh shots emerging. Now, the market seems to be on a steady wicket. I would be very surprised if we fall in to the sub-4,800 mark too soon.”

Jain said a broader tightening is expected from RBI. "One would really like to hear what would RBI do to maintain credit offtake because the entire banking sector and economy is trying to grapple with a possible demand slowdown. When demand slows down, there is also an investment slowdown and you have a twin impact of that. So, that is when credit offtake of banks could really suffer. There will be the usual tinkering which would happen. One would like to get guidance from RBI on what it thinks about the manner in which the economy is shaping up, and the rate at which it is likely to grow going forward. These are some of the indicators that the Credit Policy really has to answer."

According to Jain, the manner in which the market has stayed in a stable zone for the last 7-8 trading sessions has enthused a lot of people to take up portfolio positions despite the carnage of January and the manner in which it continued right until the end of March. "A lot of people have been enthused to go ahead and buy. In the non-heavyweight category, midcaps and smallcaps have seen a lot of buying with a view to milk short-term gains as also to create positions for the long-term."

Jain is bearish on the IT pack. “The IT pack has seen numbers from the top 4-5 counters. TCS has been a little muted and the impact of that has resulted in some profit taking particularly in the TCS counter. All these counters had run away after Infosys' numbers. What we are seeing merely is the sell on news kind of phenomenon and TCS with its muted numbers has created some sort of a question mark.”