Despite strong global cues, Indian markets started the week on a negative note and slipped further to close at the lowest level in the last three months around the 16,900 mark. The action was not done yet as further improvement in the global cues couldn't keep our markets lower and a sharp rally in the next two days resulted in benchmark retesting the territory of 17,500. Post such wild moves, Nifty traded in a range for the last two days and eventually ended around it with gains of 1.80 percent against the previous week's close.

If we recall last week's outlook, we had clearly mentioned that the benchmark may see further consolidation between 16,800 and 17,500 before heading for the next leg of the action. This is precisely what has happened during the week as Nifty almost tested the lower end and closed at the mentioned higher range.

Now if we analyse the last two days trading activity; buying was definitely seen on the intraday dips. However, we did see some tentativeness at higher levels as the benchmark has already rallied more than 3 percent from the intra-week low and has reached a cluster of resistance zone seen in the vicinity of 17,500 - 17,600 - 17,700.

During the week, we did participate in the relief move but directionally, we are still a bit sceptical whether the market has enough strength to surpass the higher boundary of this range. Hence, one needs to now start lightening up longs if Nifty extends the relief move in the coming sessions. On the flip side, we sense the base has shifted higher and the bullish gap left on Wednesday at 17,250 - 17,300 is to be seen as key support.

During the week, we witnessed many astonishing moves in midcap and smallcap stocks and traders can continue with the stock-centric approach, however, they need to be very selective going ahead as we are approaching the resistance zone.