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After two days of gloom, traders were cheered by a strong relief rally. The indices got off to a robust start, and maintained the momentum through the session. The Nifty closed at 4,524 up 74 points, while the Sensex shut shop at 15,185 up 296 points..

Deven Choksey of KR Choksey Securities said investors should watch crude oil prices. "Crude oil prices are likely to soften going forward. If markets are going down from this level, probably we will not be able to sustain this rise. Currently, the markets are seeing short covering. Probably, between 15,200-15,500 we may find some amount of sell-off coming in the market, which may once again take it back to around 15,000 or a little below 15,000."

Investors will have to play this particular market very cautiously, he said. "If one has short-term positions, one will have to play really well as far as this market is concerned, because it is not in your control. It opens with a gap and hits you on both sides if you are committed on either side."

According to Choksey, global regulators are coming together to curb liquidity from the global market place, which means that the money will have to come out of the speculative asset class like commodities and oil. "It also means that some amount of softening is happening sooner than later, particularly in oil. Given that kind of scenario emerging, economic fundamentals, which otherwise started turning bad, may not get as bad going forward. If funds start coming out of commodities, and crude oil, then crude oil prices will start coming down. In such a situation some amount of optimism can happen in the market, with some amount of money flowing back into equity market. Equity markets, particularly in emerging markets, may get some amount of re-rating into stocks and that could probably stabilize the market going forward."

In the short-term, Choksey said, there is some amount of short covering leading to the upside in the market, which may not survive. "The markets will once again come down but this is the kind of trading range one will have to operate in till full stability comes in. The rangebound moment has not gone away. The Sensex may trade between 14,700 and 15,500 for the next few days. If it trades for at least the next few days and sustains in this band, probably we will have to wait for newer levels to emerge on either side, based on the development that takes place in the global markets."

Vijay Bhambwani of bsplindia.com said buying commitment needs to step up sharply before one can go and buy and hold something. "I would definitely like to start reducing my commitments on the long side. Yesterday, one saw approximately 55 lakh trades on the Nifty, with an average ticket size of almost Rs 25,000. That's is not the kind of ticket size or the number of trades I would have wanted to see on a day where the markets closed off the intra-day lows. Buying commitment needs to step up sharply before one can go out and buy something."

Source: Moneycontrol.com