The Nifty gained 54 points over the day to close at 4855. After
many trading sessions the bulls made a decisive comeback
yesterday leading to a strong rally. After a gap-up start the index
stayed quietly in a range in the first half that took shape of a
bullish reversal pattern from which we spotted an upside
breakout around mid-day at 4818 levels leading to a huge rally
towards the end. The upmove was on good volumes and with
excellent momentum. Whenever the IT and Banking segments
have done well in the recent past the indices have moved up in
tandem, which is what happened yesterday. The technical set-up
for both these sectors continues to look good. The move above
4850 (futures) yesterday has almost confirmed a new pattern
breakout giving us a target of around 5040. However, we need to
keep in mind the importance of 4960 (16600 on the Sensex) as a
huge resistance and hence take a step-by-step approach. In
case the Dollar Index were to reverse from 81 levels, the markets
would use it as an excuse to move higher. Overall, the indices
are likely to witness follow-up strength.