Positive momentum likely to continue on Dalal Street: Analysts

Press Trust of India / New Delhi September 26, 2010.

Stock market is likely to extend the positive momentum this week, as India remains the hot spot for foreign funds inflows, the main driving force behind recent bull run, analysts have said.

"Overseas investors are pouring in money in local equities and the trend is likely to continue for coming days, which will help the market to extend gains this week also," Bonanza Portfolio Vice President (Research-Equity) Avinash Gupta said.

Though volatility in the markets cannot be ruled out, as the expiry of derivative contracts is due this week, he added.

With problems still not over in Europe and more slowdown expected in the rate of Chinese economy growth, India and some Asia-Pacific countries remain obvious choices for foreign funds.

"This trend is likely to continue for some time and the positive momentum is likely to be there in the Indian markets this week also," brokerage house ICICIDirect said in a note.

After more than 32 months, both the benchmark BSE Sensex and NSE Nifty revisited the 20,000 and 6,000 levels last week, fuelled by strong FII inflows.

On a week-on-week basis, the Sensex gained 450 points or 2.3 per cent to close at 20,045.18, while the Nifty rose by 133 points or 2.3 per cent to 6,018.3 points at close. Market posted fourth weekly consecutive gains.  

"The vertical breakout suggests that markets are likely to move further higher," Globe Capital Markets Senior Research Analyst Nirav Vakharia said.     

Though equity analysts say investors should take cautious approach as market is at a very high level, they do not expect sharp correction in the coming days.     

"It appears that it will require some significant negative development in the global space for Indian markets to fall significantly from here. Otherwise, we may see some occasional profit booking," an analyst said.     

Brokers said US GDP data for the second quarter would be an important event to watch out for this week.     

"GDP data of US and UK, consumer confidence data and employment data of US may give further direction to equities," SMC Global Securities Research Head (Retail) Saurabh Jain said.