Outlook remains positive

After breaching the all time high and a close the market outlook remains positive. The strong overnight gains in US markets and firm Asian indices in current trades may keep the sentiment bullish. However, caution should be maintained as higher bouts of intra-day volatility is likely to persist on the back of the market's run-up to record peak in the last session. Key local indices, the Nifty could test higher levels around 4300 in the short term and has a key support at 4220. The Sensex is likely to test 14400 on the downside while it may face resistance at 14600.

US indices gained immense strength on Monday as investors cheered buyout news, falling treasury yields and a better-than-expected report on manufacturing activity, with the Dow Jones soaring by 0.95% or 127 points and the Nasdaq also ended firm with gains of 1.12% or 29 points at 2632.

Excluding Patni computers rest of the Indian ADRs witnessed decent to firm buying support. MTNL was the major gainer amongst the ADRs and gained 2.58%, while HDFC Bank added 2.07%. Infosys, Satyam, Wipro, Dr Reddy's, Tata Motors, Rediff, ICICI Bank and VSNL were up over 1% each.

Crude oil prices moved up marginally. While the Nymex light crude oil for August series went up by 41 cents at $71.09 a barrel. In the commodity segment, the Comex gold shot up by $8.30 to settle at $659.20 an ounce.