New Delhi: In the absence of a major trigger on the domestic or global front, Dalal Street is expected to see range-bound trading this week, analysts say.
According to Broking House ICICI Direct, “Although the market is rising, the indicators are still moving in strong limits and it seems to be moving out of steam.
“In terms of valuations and even from a risk-return trade-off angle, the domestic market is showing some weakness and is likely to see some downward correction in the short term,” it added.
Despite the overall growth, the domestic market is performing less against most of its global counterparts, including China, which grew 19% over the same period.
“Investors are cautious and the market may see a sideways move this week,” said Abinash Gupta, assistant vice-president of Bonanza Portfolio Research.
Analysts further say that following the negative global signal, the market may open on Monday with a negative bias, however, it may bounce again after the flow of funds.
“Tracking weak U.S. and European markets, Dalal Street could open with a negative bias on Monday. However, FIIs are still enthusiastic about India’s growth story and will help bounce-back a sustainable flow market, ”said Alex Mathews, head of research at Geojit BNP Paribas.
Overseas institutional investors are positive in the domestic market and last week netted Rs 5,590 crore in local stocks, taking their total investment to Rs 51,185 crore so far in 2010, according to SEBI.
“Global parameters will be important in determining the direction of the internal market,” Mr Matthews added.
On the domestic front, the rapid progress of the monsoon has remained a key factor for the market. The June IIP figures, which are set to be released this week, will also be important and worth watching.
The domestic market recovered last week and both indices reached their 2010 new highs as FIIs continued their buying. On a weekly basis, the Sensex rose nearly 276 points, or 1.5%, to 18,143.99.
On Friday, Wall Street also settled in red for slower job market data and July retail sales figures. The Dow Jones lost 0.20% and the S&P 500 lost 0.37%.