Markets have once again encountered resistance at around 5300 levels of Nifty. One will be tempted to conclude that the markets are peaking out once again and we will pull back to 4700 levels or the lower end of the trading range again. However we expect a somewhat different scenario to unfold. We feel that markets could stabilize around these levels for sometime before breaking out of this trading range on the higher side. Though the indices are likely to move up by only about 5-7% higher in the near term, yet the movement in mid caps is likely to be far more significant. In fact the movement in mid caps could reach euphoric proportions before a major correction sets in. For traders it makes sense to use the present weakness to accumulate quality mid caps to take advantage of the impending buoyancy in the near term. For investors, we advice staying invested for the moment and partially book profits on the way up. Additional purchases should not be carried out at this stage by conservative investors as the markets have moved up significantly on the back of increased liquidity inflows. Only active investors and traders should buy into these markets with a stock specific approach keeping a tight stop loss at 5150 levels of Nifty.
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