The bulls are making a comeback on Dalal Street. After yesterday's stellar pullback, the markets surged yet again today. High beta stocks lead the charge and the Nifty closed well above 4200, with above 3% gains. The Sensex too partied, gaining 399 points to close at 14,253.

All BSE sectoral indices ended in the green, but the capital goods, realty, and metal stocks were the real stars clocking gains of between 5% and 8%. The broader markets outperformed the frontliners and the advance-decline ratio came in very strong at 8:1. Turnover too picked up to over Rs 81,000 crore.

The Power Minister's bullish statements on capacity addition target sent power stocks zooming. Reliance Power and JP Hydro Power closed with over 9% gains.

Also see: Nifty ends above 200 DMA of 4230; broader mkts outperform

On market outlook:

Jagdish Malkani, Country Head, Taib India, said the market is due for big bouts of volatility as newsflow come in. "We have had a very sharp pullback after the budget and disappointment therein is seen by a lot of quarters. Global factors and monsoons could play party-poopers. The monsoon card will play out in the next few weeks. Today, Assam has declared 14 districts drought hit. There is a lot of confusion as the results play out. One also needs to watch the US markets as it has direct ramifications on our markets. I am not in the decoupled camp at all."

He feels it is a great traders market but discerning any trend in the immediate short-term looks difficult.

Sudarshan Sukhani of Technical Trends is unsure if the current upmove in the market is a relief rally or a resumption of the uptrend. He too expects the markets to remain volatile. "Volatility for the Nifty currently stands at 50% which is almost near the highest that we have seen over the last eight months. In March when this uptrend started, volatility was 30%. Bull markets or up trends start with low volatility. In this volatility, we can go up even more."

He seconds Malkani's though that this is primarily a traders market, but was quick to add for traders too it is not easy.

However, Amit Dalal of Amit Nalin Securities expects the markets to consolidate for a couple of months. "I doubt we will be able to breach new highs easily unless you see any huge announcements coming from the government about its public sector divestment program. This range of 3,900-4,200 or 4,100-4,400 will continue for a while."

He advises investors to buy if the markets correct. "This is a trading market. It is an expensive market. If you take forward discounting, we are not a cheap market right now. If there is any correction, one could blindly invest into this market because the risk of earnings de-growth are very little. Monsoon is the biggest risk and that risk itself is getting curtailed. There are a lot of midcaps and a lot of stocks where the stories are still building up, and valuations are not expensive."