Traded volumes were marginally higher than the 10-day average and the breadth was very positive. Both these indicators are signs of bullishness.
The upmove was secular as even the technology sector participated in the rally. The markets have made another recent high and the oscillators are now firmly entrenched in the overbought zone.
The Nifty is likely to encounter resistance at the 1295 -1308 levels which is a historical meltdown point in March 2001.
The Sensex is likely to see resistance in the 4100-4120 band, which is a significant previous top on the weekly charts.
The support on the downside is likely at 1230 and 3848 on the Nifty and Sensex, respectively.
I feel the room on the upsides is marginally lower than the downsides and therefore fresh aggressive bullish positions must be initiated very carefully.
The thrust is likely to come from the cement, steel, automobile, telecom, oil & gas, pharma and banking sectors.
The corrections in these segments are likely to be shortlived and will probably see these stocks taking support at their short-term moving averages.
The outlook for the markets on Tuesday is that of optimism as the undercurrent is still bullish and follow-up buying in select index heavyweights is likely to see the benchmark indices buoyant.
Among stocks, Reliance Industries is witnessing strong resistance at the 365 levels where heavy selling exerts a downward pressure on the prices.
Should this counter manage a close above this hurdle for 1-2 sessions with higher volumes, I expect a 3-4 per cent appreciation in the short term. Buying is recommended above this resistance level in the cash and derivatives segment.