Technical Analyst Ashwani Gujral sees the Nifty trading in a 3,900-4,500 range going forward. He does not rule out a 40%-50% rally in midcaps.

Here is a verbatim transcript of the exclusive interview with Ashwani Gujral on CNBC-TV18. Also see the accompanying video.

Q: Is the correction over for the Nifty?

A: The correction is over in the sense that the downside is not there beyond 3,900 now, but it will continue and you will get into a range of maybe 3,900 to 4,500. 4,500 was the peak we made on Budget day. So things really change if 4,500 is taken out. The problem is if a ball is thrown hard at the floor, it tends to bounce up quite a bit. So, you are seeing this sort of big upmove because everybody went short, everybody had the same view. If you have been around this market from 4,050, probably today is a good time to take some money off. Midcaps will continue to run. They had fallen 40-50% from the upside, so easily 40-50% rally from the downside is possible.

Q: How are stocks like Lanco, Reliance Power, Jaiprakash Hydro looking technically after yesterday’s rally?

A: Lanco Infratech had support around Rs 340. It tends to fall sharply and rallies back equally sharply. It is probably looking the strongest of the infrastructure stocks. It has probably got resistance now at Rs 452.

Jaiprakash Hydro again is finding strong support at Rs 65. The next level here is Rs 86 where it runs into resistance. If it can take that out, then it will head into the 90s probably Rs 95.

For Reliance Power, Rs 143 is strong support. Within a couple of days, you could find it around Rs 180. All these power stocks are looking good.

PFC is particularly looking good because that is almost at the verge of taking out its previous intermediate high. So, a lot of these power, power ancillary stocks would lead this upmove.