Nifty above 5450: Is the pullback just a blip?

RELATED NEWS Correction on cards: Is it right time to buy mutual funds? FIIs cautious on India, may trim funds : Nomura What is Veda Investments betting on? Will Nifty break below 5350 anytime soon? Nifty BSE | NSE 30/05/12 Are Mutual Funds betting on Nifty?

With global cues turning positive, the Indian picture too seems to be picking up sheen. The Sensex closed at 18,205, up 234 points an Wednesday and the Nifty stood at 5,471, up 69 points. But there is a definite air of caution among experts. They believe that the uptrend is a mere blip and the correction that the market had been witnessing since the past few trading sessions will continue and in deed be steeper.

Ambreesh Baliga of Karvy Stock Broking sees the uptrend continuing only for the next 30-40 points. "5,500 will be the top for this and we could again start correcting, which will be much deeper. Once 5,350 is broken on the downside the fall would be quite sharp-it will stop at 5,300 or even 5,200. The next stop after that would be closer to 5,000 which also won't hold for very long and the markets would go possibly to those fundamentally decently valued levels of 4,800-the final support level. This too could be broken if the velocity is very high but beyond that we will not fall too much. In totality we see a fall of closer to 15%."

Though India will continue to outperform its global counterparts, it will also continue to be a hostage to the global situation, especially the US, which doesn't seem to be too bright, says Satish Betadpur, Managing Director, IIR Group PLC. "That market could drag us down. But India to a large degree is kind of decoupling from the west and we will have our own growth going forward and therefore our markets should substantially outperform the other markets," he explains.

On his reading of the pullback, Technical Analyst Ashwani Gujral says, the correction is not yet over. "We will see another 15-20 points surge on the Nifty. The speed and the way stocks are running up suggest that this is somewhat of a pullback. But the key factor here now is 1,040 on the S&P-either that level holds and we again get some kind of a rally or that level breaks down and we fall another 100 points on S&P. That will determine whether the Nifty gets back above 5,500 or we go back to 5,350."