Indian markets witnessed a breakout on August 26 as bulls put up a strong show pushing benchmark indices higher. Sensex reclaimed 37,000 while the Nifty closed above 11,000.

Nifty is still down over 8 percent from its record high of 12,103 registered back in June, and a slew of measures introduced by the government could keep the momentum going on D-Street for some more time, say experts.

The initial momentum if sustained could push the index beyond 11,180, which would open room for the index to head towards 11,400-11,500, they say.

The measure announced by the Finance Minister on August 23 created a floor around 10,800 for the Nifty that will act as crucial support for the index, and the announcement from the Reserve Bank of India (RBI) to transfer a surplus of Rs 1.76 lakh crore to the government will add to the sentiment.

The transfer sum comprises of Rs 1.23 lakh crore of surplus for the financial year 2018-19 and Rs 52,637 crore of excess provisions identified under the revised Economic Capital Framework (ECF) that was adopted at the central board meet.

The surplus funds from the central bank make the fiscal deficit target more realistic and have opened room for a stimulus package that traders would be eyeing in the near term.

“Windfall gain for FY20 budget would be Rs 57,600 cr (0.3 percent of GDP). The suggested methodology removes the possibility of such large transfers in next few years,” Citi said in a report.

“The windfall may be higher if the govt decides to ask for another interim dividend in Q4. The hope of a fiscal stimulus from this windfall should keep equities buoyant in the near term,” added the report.

In terms of technicals, after testing the recent low of 10,637 last week, Nifty bounced back to reclaim 11,000 on August 26. The next logical target is placed above 11,500.

“Based on different technical parameters and wave counts that we maintain, we can safely conclude that market registered a short-term bottom that may remain vulnerable for a breach,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“But, from current levels wave structure demands a counter-trend rally that appears to have started from the lows of 10,637, and the logical target for this rally should be somewhere around 11,550,” he said.

Favourable domestic cues and ease in trade tensions globally should help sentiment on D-Street at least in the near term, say experts. However, the pain in the broader market is likely to continue.

“Trade war is a concern now. The market is discounting every news and tweet and investors are now losing their cool. Since long term money needs a stable environment in the global markets and it is just not the environment that would be embraced easily,” Mustafa Nadeem, CEO, Epic Research told Moneycontrol.

“For Nifty we believe the momentum may continue with 10,800-10,850 as an intermediate support for an upside move that can surpass 11,400 if bulls can take out 11,180 on a closing basis,” he said.

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