The markets took a breather and consolidated in today's trading session. They were ranged and ended flat after yesterday's rally. However, selective buying was seen in midcap stocks. Most of the BSE sector indices closed flat.

Banking and IT indices closed in negative terrain. Selective buying was seen in capital goods, pharma and FMCG stocks. Telecom majors Reliance Communications and VSNL were among the top gainers.HDFC, ACC and Zee Entertainment also closed in green. Bajaj Auto, Guj Ambuja Cements and SBI were among the major losers.

The Sensex closed up 35.12 points, or 0.24% at 14453.72, and the Nifty was up 17.20 points, or 0.40% at 4278.1. About 1084 shares have advanced, 1430 shares declined, and 89 shares are unchanged.

The BSE Small Cap Index closed at 7,286.77 down 0.1%. The BSE Midcap Index ended at 6,144.88 gained 0.25%.

According to Shashank Khade, Vice President of Portfolio Management Services Kotak Securities, the last one month has seen a lot of activity in the market.

He then goes on to note that desipite the IT service companies not participating since April 1, the Sensex did actually well. But he adds that without the IT service companies giving a positive impact, it will be difficult for the Sensex to actually give a large upside in the near-term itself.

The global markets' upward trend without a correction, measures taken to curb the market upsides, not much FII buying happening in May, as well as 31 new stocks being added to the Futures & Options list, is leading to a heightened speculative activity in the markets. As a result of which, Khade feels it is definitely time to take some cautionary note on the markets right now.

On the lower side, he asks to watch out for the 13,000 level, while 14,000 shoule be possible in the best scenario; on the upper side, 14,500 should be possible in an optimistic scenario.

Devesh Kumar, Managing Director at Centrum Broking says, "I am not very excited about the current rally," and sees the markets remaining choppy. He sees a couple of more days of upside and then probably some amount of correction setting in, on back of cash call, which are awaiting three to four mega issues, which will hit the markets soon.

Within the next 60 days, he expects a 10-15% correction in the market, before which, it will remain volatile; ultimately there has to be a correction.

His advice is to wait for the market to take a breather and then pick the stocks. "At this point of time one has to be very careful and one has to look at valuations very carefully. No point in chasing the stocks, which are running very fast now," Kumar says.

Source: Moneycontrol.com