On the back of 'good' news, the Nifty rallied with an opening gap, closing 130 points higher. Today's market action should be a bit of a disappointment for the bulls, since the less than 3% gains are lower than the gains recorded by the Asian and European Markets. Also, the Nifty drifted down to close at the lows of the day.
Too much should not be read in intra day movements. Maybe, tomorrow could be different. The facts are:
The Nifty closed 130 points higher. Short term momentum is up.
The Index remains inside a trading range with boundaries between 4200 and 4650.
Movement inside the range can often take the shape of a drunkard's walk, meaning the moves are random, with no pattern. This seems to be happening now.
Inside this trading range, a smaller four day range is now visible, with boundaries between 4330 and 4530. This smaller 200 point range will determine the next move of the market. A close above 4530 calls for buying, below 4330 calls for selling. Inside this range, there will only be minor day trading opportunities.