“Although the market is moving forward it seems to be running out of steam as the indices are still moving in a strong range,” according to broking house ICICI Direct.
“From a valuation point of view and also from a risk-return trade angle, the domestic market looks somewhat vulnerable and is likely to see some downward correction in the short term,” it added.
Despite the overall increase, the domestic market underperformed many of its international peers, including China, which saw a 19% increase over the same period.
“Investors are cautious and the market is likely to see a one-sided trade this week,” said Avinash Gupta, vice president of research at Bonanza Portfolio.
Analysts further say that, following the negative global cues, the market may open on Monday with a negative bias, but, it may return later in the fund cycle.
Alex Matthews, head of research at Geojet BNP Paribas, said: “With US and European markets tracking weakly, Dalal Street may open on Monday with a negative bias. However, FIIs are still bullish on India’s growth story and continued inflows will help the market recover.” Foreign institutional investors have been positive in the local markets for over 50 crores in the last week. Stocks, according to data with Sebi, have raised their total capitalization to $51,185 million so far in 2010.
“Global parameters will be important to decide the direction of domestic markets,” added Mr Matthews.
On the domestic front, the rapid development of monsoon is a key factor for the market. The IIP figures for June, due this week, will also be important and need to be watched.
Domestic markets rebounded during the past week and both indices touched fresh 2010 highs, as FIIs continued their buying spree. During the week, the Sensex rose by around 276 points or 1.5%, to close at 18,143.99.
On Friday, Wall Street also settled into the red with sluggish jobs market data and unimpressive July retail sales figures. The Dow Jones lost 0.20% and the S&P 500 ended 0.37% lower.
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