It was a day of spectacular gains for the bulls as markets opened on a strong note and sustained at higher levels through the day. Nifty closed at 5,115 up 104 points, while the Sensex shut shop at 17,354 up 375 points.

Rajen Shah of Angel Broking said there is still some steam left in the rally. He feels the markets could consolidate between 16,500 at the lower end and about 18,200-18,300 at the upper end.

Rajat Bose of rajatkbose.com said if we see two closes above 5,096 now, chances are that we would see even higher levels. "The Nifty is moving above the critical level of 5,096, which held out as a resistance for a large period of time. Today, we crossed that level and are trading above that. If we were to close above that level, chances are that we would see higher levels and this is a critical deciding level. If we see two closes above 5,096 now, chances are that we would see even higher levels. The reversal that we thought last Monday could actually be there once we close above 5,096."

Excerpts from CNBC-TV18’s exclusive interview with Rajen Shah:

Q: What have you made of trade and does it seem that it will stick above 1,500 because this week has been quite volatile?

A: Over the last three months, we had a lot of negative news in the market. US subprime, CRR hike, food inflation and other such factors has been digested by the market. It does surprise one by the way it is moving up and showing strength.

The next positive trigger for the market could be the monsoon. So, if the initial monsoon reports turn out to be normal, we could head even higher from hereon.

As far as the corporate fundamentals are concerned, crude oil prices at these levels is going to take its toll on the economy, which is likely to slowdown to about 7.5%. Corporate numbers are not going to be as impressive as they were in the past. But most of this has been factored into the market.

So, what is going to take the markets up from hereon is going to be liquidity, which is very strong. Currently, in the domestic market where mutual funds are sitting on about Rs 15,000 crore of liquid cash, there is a lot of money that is being made by the gulf countries on account of high crude prices. So, that is also going to get into countries and economies that are going to do well.

While India is relatively well-placed vis-à-vis other countries and would still be the third fastest growing economy in the world, money flow is going to be the important factor that could take the markets up from hereon more than fundamentals. We are positive and price-wise it is a fairly priced market.

Q: Are you looking at banks more carefully now given their move or do you think it is just more sporadic?

A: No. Most negativity has been factored into the valuations of banking stocks. ICICI Bank at current levels certainly looks right for a good move from here on. We at Angel Broking strongly believe that the banking sector would outperform the Sensex in the coming year

A: Hindalco had underperformed for most part of the bull market. When the beating happened, it was beaten out of shape. The results are going to be good, and valuations are also pretty attractive in its case. It is playing catch-up more than anything else. So, we expect it to go up to at least Rs 240 in the coming weeks.

A: We are extremely bullish on the agricultural space. Irrespective of what happens in the short-term about these notifications coming and going, we are pretty sure that sugar prices over a longer period of time should continue to move up from the current levels. If you have got a 24-36 months kind of timeframe, the returns would be fabulous from hereon.

A: We are literally seeing a lot of buying happening in many stocks in the midcap space. The way the markets are moving and discounting all the negativity shows they have a lot of strength within and could certainly continue to move ahead. We have been picking a lot of midcap ideas because there is sheer value on those stocks, beaten about 30-40% from the top.

For example, Castrol has posted excellent numbers. Their year ending is December 2008. Based on the first quarter numbers, despite the fact that crude has gone up to USD125 per barrel, this company has posted fabulous numbers. Based on those numbers, the company could easily clock an EPS of about 21. So, we are seeing a lot of buying and the stock has moved up from Rs 250 to Rs 305 levels.

Similarly, Apollo Tyres posted excellent numbers. A lot of buying is happening in companies which have posted very good numbers. That is going to be the trend going forward in good quality stocks with good numbers. They should continue to see buying interest in the coming weeks.

A: No. The rally has some more steam left. We could probably see may be 18,000-18,300. But from that level onwards, we do not have any major positive triggers for the market in the short-term. The monsoon could be one of the triggers. But that would be maybe around the last week of June, when we will get a real idea of how good the monsoons are. So, there are no major positive triggers for the market. Maybe we could consolidate between 16,500 at the lower end and about 18,200-18,300 at the upper end. This is the band in which we would see the market for the coming three-to-four months. So, maybe that band has strong probabilities of where the markets could be in.

It is safe to assume that my clients and I may have an interest in the stocks or sectors discussed.