The markets showed smart recovery and stability after yesterday's steep fall due to the budget disappointment. The Sensex gained 127 points to close at 14,170, after hitting a day's high/low of 14,251 and 14,000 respectively. The Nifty closed at 4202 up 0.88% or 36 points, after seeing an intraday high of 4231 and low 4155 respectively.

The market breadth was flat and the cash volumes dropped heavily compared to previous session. Huge buying was seen in buying cement, auto and telecom stocks. Even select buying was seen in technology, FMCG, capital goods, private banking and select power stocks. However, selling was seen in select oil & gas and metal stocks. The July Nifty future ended with a 9 point discount at 4193.

The markets have shown strong stability after yesterday's sharp fall. The intermediate trend still remains cautious but The benchmark indices closed on a flat note, after seeing extreme volatility throughout the session. The Sensex closed at 13,757 down 12 points, after seeing a swing between 13,879 and low of 13,643. The Nifty gained just
2 points at 4081, after witnessing swing between a day's high/low of 4114 and 4039. Among the broader indices - BSE Midcap Index was up 0.50 % and BSE Smallcap Index slipped 0.17 %. Metal, telecom, power and pharma stocks witnessed buying interest while capital goods and auto stocks were under pressure. The July nifty future ended with a 5 point discount at 4075. Inflation for week-ended June 27 came in at -1.55% versus -1.30% week-on-week (WoW).

The intermediate trend still remains cautious as traders lacked confidence to take positions ahead of earnings season and uncertainty in global markets. The Dow Jones, FTSE and S&P 500 have broken their 200-day moving averages which is a worry sign going forward for the Indian markets. Shanghai Comp is the only Asian market which is outperforming and trading at a 52-week high. The technical are suggesting that this index is in an overbought zone and could correct at least 6-10% from the current position as the RSI is above 80%.

Indian markets have corrected 14% from the recent peak of 4693 upto today's low of 4040 and this fall was totally contributed by Reliance Ind which took a beat of 24% from the top of 2379 and hit a low of 1797 in yesterday's trade.

The trend is weak as huge selling pressure is witnessed in nifty around the 4110-4150 regions. Unless we see a big move above 4150 this choppiness will be there. If nifty manages to surpass 4150 then next level could be 4250 shortly. And on the lower side 3980 should be bottom for the near term, if nifty trades below 3980 then the fall could be very sharp to the extent of 3720.

Currently markets are little bit oversold and chances of a rebound is very high, so selling at lower levels around the support region should be avoided.

Nifty Future Daily chart: (4074) - The trend is very weak as nifty is not able to sustain above the 4110 mark. Going forward 4050-3980 should be held from a closing point of view or else Indian markets will go in for a bigger crash. Remain cautious in the market unless nifty gives a strong closing above the 4230 mark.