Nifty tests 3000: Beginning of rally or end of it?

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The benchmark indices ended marginally weak after giving up all the gains in the last half an hour of the trade. Both the indices started on a strong note following positive Asian markets and rally in US markets. The Sensex closed at 9,402, down 21 points and the Nifty ended at 2,938 down 1.2 points (provisional figures). The Indian equity markets have been strong in the past 10 days and have mirrored the rally seen in Asian and global markets.

On the rally: Is a big one sustainable or is it coming to an end?

"It's a kind of a bear market rally mainly triggered by the US bailout plan on the toxic assets, which came through. I do not think fundamentally too much has changed in the past week or ten days," says Jitendra Sriram, VP and Fund Manager - Equities at HSBC AMC. "Obviously, there were a lot of short positions too in the market."

SA Narayan, Managing Director of Kotak Securities, echoes Sriram's view. "I don't think the rally will sustain in the short run. We have had four-five days of a good rally and there has been a lot of short-covering in the last two days. Once this short run fizzles out, the next stage is to see whether we see real institutional money chasing it," he says. "We did see some amount of foreign inflows and if that continues then this rally can sustain but I do not see FII money chasing it around 10,000 levels."

On possible market range ahead

Narayan says, "I see the market continuing to be in a range of 8,000-10,000 [it will be] more news-driven both local and international and as it tends to go up the range reaching around 9,000-10,000, you will see higher volumes." He adds that the March quarter numbers, elections and international markets would remain key cues ahead.

Sriram said the markets will focus on two things next week onward: the G20 summit and public-sector undertakings announcing their provisional numbers. "It (the market) will focus more on results. The political news, however, also remains a little murky in the sense of the alliances breaking up and new ones being formed. So, the markets will remain volatile over this period," Sriram says.