Short covering or trend reversal; views differ on today's rally

After 3-4 days of consolidation, the market today chose to retrace its path upwards. Experts say today’s gains were backed by short-covering in heavyweights like State Bank of India and Larsen & Toubro.

However, Ashwani Gujral of ashwanigujral.com has a different opinion. In an interview to CNBC-TV18 in its Closing Bell segment, Gujral points out that downside traction has been missing. "In a strong uptrend, market dips become shallower which is the case right now. Gains today were likely not totally due to short-covering," he says.Gujral believes there is good chance the market correction is over.Another expert Sudarshan Sukhani of s2analytics.com, however, does not see today's correction as a break-out and expects resistance to continue at current levels.  Independent expert Ambareesh Baliga expects market to stay range-bound between 8,000-8,200 over the next few sessions. He advises using every correciton to buy in. 

Although extremely positive on medium and long term, BSE & NSE Member Dipan Mehta feels the short term trend could be choppy and advises staying on the sidelines till Fed monetary policy and Brexit issues are out of the way.   

For Gujral it makes sense buying Bank Nifty call option. He says, "it may not hurt because private banks are just about correcting and if PSUs also join then Bank Nifty could outperform much more from here."On the impact of merger of associates into SBI, Baliga asys it will prove to be margin-negative for the banking behemoth. However, cost rationalisations will be possible in the longer run.