If we look at the market on closing basis, Nifty posted 100 points gain - impressive performance, but if we look beneath the surface, market first opened 150 points up but then slipped 50 points to close at 4210. In summary, we can say that it was Global cues that gave 150 points lift on the open but then the political instability shaved off 50 points during the trading day. It seems this tug of war between global and local factors is now going to intensify till we see some more clarity on both the fronts.

Don't get euphoric by yesterday's gain. Technically, the bottom has not been formed. But if market corrects on political uncertainty and Nifty does not breach 4000 on the downside, it can present a great buying opportunity for everyone at the index level. Just to refresh the memory on what I mean by bottoming out - let us look at what happened when market corrected last time in March-April 2007, and how bottom was formed. The market made a slide to 200 day moving average. It then pulled back but then again sharply corrected to 200 day moving average. It then made a sharp recovery to 100 day moving average but again got sold into and retested 200 day moving average. It made another recovery attempt and moved past 100 day moving average.

If we assume that this time also 200 DMA will hold, then it means that we should be ready for rangebound trading for some time to come. The fundamental and technical picture both points to the same scenario. Rangebound trading is sometimes great because it brings stability in the market and gives more confidence to traders to buy interesting stories and ideas. Remember, yesterday in my morning notes, I covered a story on Fertilizer sector and how it looks like a great buy. It is great to see that bullish sentiment still prevails though selectively. As more confidence returns in the market, we will be able to spot many more interesting ideas. Remember, everything goes for a toss if market breaches 4000 on the downside.