Markets have rallied today showing absolute strength. Both Sensex and Nifty have rallied nearly 4.5% each. Midcaps have also traded well. Extraordinarily, Sensex has breached the 16,000 mark. Experts attribute this rally to the positive newsflow from the US and from FIIs.

Hemang Jani of Sharekhan said it's also because people have begun to believe that at about 13-14 times '09 EPS, once can't go wrong much. He agreed that markets have made a bottom at 14,500 to 15,000 levels and 4,500 for the Nifty.

Treading the positive path, if markets show stability over the next few weeks, more strength will come in. Because post the March clean up of balance sheets, April will see more money being pumped into markets.

What to buy? What to avoid?

But despite the good news, Jani, who is the AVP - Market Analyst at Sharekhan, is still wary of recommending a buy on the markets. He said, "It is a tricky call because, markets have seen very erratic movements and depending upon the news flow, market could react even negatively to anything that comes by from the overseas market. But on an overall basis, we think that the first indications of positive news flow will bring back the liquidity waiting on the sidelines, because most people are waiting for stability and March cleaning up getting over. So overall we are positive, yes you may have some negative news flow to which market could react."

Jani said there is strong visibility of earnings in sectors like capital goods, telecom, FMCG but for people who are interested in investing for the longer term. One can buy select pharma stocks where people are extremely confident about the earnings growth from a short-term trading perpective. He said, "I think one can look at some IT stocks and the metal space where stocks have taken a beating over the last few trading sessions. On a purely valuation basis some of the stocks are looking attractive."

"The stocks that one can definitely stay away from, due to a high risk of downgrades or disappointment in March earnings, are banks and real estate to some extent", he adds.