Markets extended yesterday’s gain and remained on a firm footing as the day ended on a promising note. After opening at 5411, Nifty gained from strength to strength to finally close the day at 5480 up 66 points. The broader indices underperformed the benchmark index, S&P CNX 500 was up 1.08% and CNX Midcap was up 0.74%.

We have witnessed a sharp pull back from the low of 5355 in the last two days. Does this pull back has the power to attempt a breakout above 5600? Our prognosis suggests the following scenario in the short term. If Nifty breaches the level of 5550 by tomorrow, then it can propel the market to much higher levels of 5700 or beyond.

The NSE Mid Cap index continues to indicate a short term resistance at 7700. A breach above 7700 can help this index rise till 8000 where it could counter some resistance. Momentum indicators continue to suggest bearish fatigue at lower levels, but we now expect the index to move up in the near future.

In the medium term, we expect the Nifty to start inching up. As mentioned the nearest resistance is seen at 5600-5625 but a move above that cannot be ruled out.