Experts advise caution

After a subdued start at the start of the week ended, buoyed by positive developments like decisions at the EU Summit on debt crises, weakening crude oil prices and optimistic reform ‘clarity’ on GAAR, markets recorded their third biggest single-day gain in 2012 on Friday.

On the BSE the Sensex ended 458 points higher at 17,430 and the Nifty on the NSE closed at 5,279 with a 133 points gain.

Mirroring the strong bullish undercurrent market breadth improved significantly. After touching a record low of `57.33, the rupee notched its biggest gain since May 2009 to end the week at `55.67.

With issues like current account deficit, high inflation and interest rates, weak progress of monsoon and lack of major reform announcements are a “big concern”, analysts warn against “irrational exuberance”.

Expectations on fourth quarter numbers are low. Adopt stock specific strategy for present.

Barring any negative news flow like renewed concerns from the Euro zone or continuation of weekend rebound in international crude oil prices, the markets may consolidate and move to much higher levels in the nearterm.

For the week ahead, chartists predict a trading range of 17,150-17,900 for the Sensex and 5,190-5,420 for the Nifty. Immediate supports for the indices are at 17,150 and 17,000 for the Sensex and 5,200 and 5,140 for the Nifty.