The other factor that reinforces the strength of the recovery is that the index has now closed well above the 7-day exponential moving average which is at 2940. It had slipped through this average at 3389 on July 20.

The advance volumes too have risen alongside the robust rise in the index. At the BSE the advance volumes in a well represented population have gone up from Rs 701 crore to Rs 1122 crore. The volume in decline has shrunk from Rs 155 crore to Rs 11 crore. Similarly volumes without change has gone down from Rs 75 crore to a mere Rs 69 lakhs. This was the third day in running of increasing volumes.

After opening at 2912 with a gain of 27 points over the previous close, the Sensex rose, but soon it slipped causing anxiety. Relief came when it tested and bounced off at 2885. The gain day-over-day is a whopping 105 points or 3.3 per cent.

The stochastic and RSI indicators have signalled a buy on the daily charts. Today's upsurge has been led by high speculation, judging by the extent of gain on select counters with huge volumes. In my view the index can go up by few more points in the immediate view.

The speculative lobby appears to have cued in on the good sentiments that is prevailing in other global markets and also a new belief that the Chinese Yuan is unlikely to be devalued for the next two years. Some global fund managers are also seen to be persuading themselves into a convenient delusion that bank bankruptcy in Japan can after all be evaded using public money.