Jai Bala of cashthechaos.com sees a resistance at 12,750-12,790 on the Nifty.

“If the markets were to not go above that, I think we are registering the possibility of a short term buying exhaustion,” he said in an interview to CNBC-TV18.

“So, this short term could also materialise over several weeks. Keep your stops tight if you are long in the market,” he said.

Bala said Reliance Industries, banking, IT, and pharmaceutical are the four legs supporting the rally.

“If any of these were to succumb to selling pressure at current levels, the market could face short term correction,” he said.

On the banking index, Bala believes that HDFC Bank and SBI are going to be crucial for trend continuation. The major resistance for the Bank Nifty is at 28,500 and 29,600, he said.

“SBI might be the bellwether for the banking index. As long as SBI is above Rs 214 there may not be a warning sign for the index. But if SBI were below Rs 214, then that is a major warning sign for the whole sector,” he said.

According to Bala, the pharma index is holding the important support level of 11,000.

However, Bala is unsure about Nifty IT holding up. “It might be on next leg move to 26,000, but if today’s low were to break, somewhere between 21,100 and 25,000, that is the key level for Nifty IT index. If that were to break, that is another factor for us to consider for us to book profits and wait for a short term correction to play out,” he said.

Bala is positive on Avanti Feed and EIH from the midcap space.

Disclaimer:

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(Edited by : Santosh Nair)