Markets were on a roll in the week gone by on expected lines. However, the extent of the rally was certainly a surprise with they gaining on all five days of the week and now sitting on six straight days of rise. BSESENSEX gained 2,311.45 points or 4.30 per cent to close at 56,072.23 points, while NIFTY gained 670.25 points or 4.18 per cent to close at 16,719.45 points.

The broader indices saw BSE100, BSE200 and BSE500 gain 4.07 per cent, 3.93 per cent and 3.90 per cent, respectively. BSEMIDCAP gained 3.53 per cent, while BSESMALLCAP gained 3.86 per cent. More than the rally in the midcap and Smallcap sectors was the fact that the width of the markets has increased significantly and the number of scrips gaining far outweighs those losing. Many scrips have started hitting 52-week highs as well. Is this a cause of worry, not yet.

The Indian rupee was under pressure but managed to close with tiny gains of 2 paisa or 0.03 per cent to end at Rs 79.86 to the US dollar. Dow Jones gained on three of the five trading days and was up 611.03 points or 1.95 per cent to close at 31,899.29 points. The US Fed would be meeting over Tuesday-Wednesday this week to increase interest rates. The street widely believes that the rate hike would be 75 basis points like the previous hike. In related news, the ECB raised interest rates by 50 basis points last week. This increase is their first since 2011. The event should not be taken as one off as interest rates are rising globally

The Russia-Ukraine war is already 151 days old and counting. While the resolution to the crisis still continues to remain uncertain, it has taken its toll on the global economy. For Russia, they have stuck to their guts and are doing business on their terms and conditions. Crude oil has also softened and in keeping with the same, the windfall tax and export duty on diesel and petrol introduced by the Indian Government has also been withdrawn.

Results season has picked up steam and the same are a mixed bag. While the banking sector has shown that the economy has gathered traction in the April-June quarter with demand for funds, there are concerns on inflation and costs. All in all, results indicate a positive trend and augur well for the coming quarters.

FPI selling seems to have abated for the time being. In the previous week when markets rose significantly, they were buyers on four of the five trading days. On a weekly basis they bought equity worth Rs 4,037 crore while domestic institutions were buyers of equity worth Rs 940 crore. If this trend continues, it will also help in bringing the dollar value to a more respectable level.

July futures expire on July 28. The present value of NIFTY at 16,719.45 points is higher by 939.20 points or 5.95 per cent. It's a huge lead for the bulls and they are unlikely to allow it to be lost. However, with six straight days of gains, Dow losing ground on Friday, FED meeting to increase interest rates on Wednesday, would all add pressure on the bulls. Expect markets to be choppy and volatile in the coming week rather than a straight uptrend during the previous week.

Last week's rally has ensured that the June 13 gap which was troubling the markets for about a month is temporarily behind us. The gap was between 53,207-54,205 points on BSESENSEX and 15,886-16,172 points on NIFTY. It was a huge gap and was about 2 per cent of the value of the indices. The top of the gap would act as a strong resistance in the coming weeks while levels towards the bottom of the gap would be the second level of support.

Coming to the markets in the week ahead, they would have volatility, news flow and a more definite view of FPIs and their immediate future course of action. July futures expiry and the FED raising interest rates are foregone conclusions. The key this time around would again be the commentary about the likely outcome of the future FED meetings. This would be a week of consolidation for the benchmark indices while the movement in Smallcap and midcap may continue for a few more days. For the smart investor it's time to book some profits in the large cap stocks and concentrate on those from the midcap space which are to declare results and play on the volatility.

Expect both sided moves which would be swift as well in the coming week. After a spectacular rally of close to 5 per cent in the last six days, markets need to cool off as well. Further having come out of a bearish phase, they need to digest the gains of the previous week which were quite sharp. The strategy would be to book profits as markets gain and look for first signs of the short-term correction which is imminent. It would be advisable to build long positions in this correction as the next up move would be sharper and take indices even higher.