We are witnessing the greatest volatility in history of the global stock markets, and there is no end in sight to the amount of liquidity provided by the Bank of Japan. Earlier last week, the Bank for International Settlements said turnover of interest rate, currency and stock index derivative contracts soared 24% to a mindboggling $533 trillion in the first quarter versus the previous quarter.

Earlier on Friday last, the Bank of Japan chief Fukui surprised the market by ruling out a July rate hike, giving FX traders the green light to hammer the Japanese yen to five years lows against the US dollar, and record lows against the Aussie dollar and Euro. By opening the door for a big Japanese yen devaluation, FX carry traders sent global stock markets thru the roof, and ignored the gravitational pull of weaker global bond markets. If you can predict the direction of the Japanese yen exchange rate, you can predict the next major move in the global stock markets.

This is the kind of global environment we are operating at the moment. Hence, the Friday's late hour sell-off is unlikely to create much of an impact in today's market activity and we might see a fresh upsurge in our markets. We firmly believe till such time there is any let up in this gusher of global liquidity our market would also be moving up even if we have to live with high volatility since there would always be people who would be quite concerned and skeptical about further upswing stating n number of reasons that are perfectly plausible but overridden by this gusher of liquidity.

The levels to watch out for would be again 4210 – 4220 for the Nifty. If this range is decisively crossed the Nifty would most likely post a major rally and might even post a fresh all time high.

Expect deeper correction in the market only when you see a decisive close below 4080 until either it would show volatile range bound activity where the Nifty oscillates between 4115 and 4220 or an overall uptrend with lots of intraday volatility.