Market recovers, but analysts warn 'false dawn'

Equities in India pulled the shutter for the week with stellar gains, soothing investors' nerves ahead of May F&O expiry on Thursday. The Sensex closed at 18326.09, up 184.69 points or 1.02% and the Nifty ended at 5484.25, up 56.15 points or 1.03%.

So, has investor sentiment livened up, finally? Not really, says Dipan Mehta, member of BSE and NSE. The market rallied on the back of the forward looking guidance given by Larsen and Toubro on Thursday, he stated. "In fact, the recent rally could be attributed as a technical bounce, short covering, or just bottom fishing," he stated. (Also read: Does Antique Broking see L&T edging out over BHEL?) Going forward, the market is expected to remain range-bound, according to Mehta. "The longer it trades below its 200-DMA (day moving average), the likelihood of a negative trend is high. The Nifty and the Sensex have found support around 5,400 and 18,000 levels, respectively. However, the 50-scrip broadbased index will witness strong resistance around 5,700 levels," he explained. Is the market headed for a long bear spell? Rajen Shah, chief investment officer of Angel Broking feels that expecting the market to outperform in the current uncertain (high inflation and interest rates) economic landscape would too much. "However, the key benchmark indices are expected to see 10% rise by March 2012," Shah said, adding that this is a purely stock-specific market, where few counters are displaying fundamental strength. One should start getting stock specific rather than playing on the Sensex or Nifty for the next 9-12 months. In addition, Gopinath Natarajan of IIFL PReMIA asserts,