Stock markets are likely to remain positive this week on the back of strong foreign fund inflow and the prospects of a second stimulus package from the government for the economy, analysts said.
“The prospects of a second stimulus package from the government will trigger positive sentiments. Also, FII investment would provide the much-needed boost to the market,” Ashika Stock Brokers Research Head Paras Bothra said.
Analysts say declining inflation and strengthening rupee are reasons to cheer for investors and would lessen the foreign fund redemption pressure.
“The domestic currency is gaining strength. The market is likely to do good on fresh fund inflow,” SMC Global Vice President Rajesh Jain said.
Further, encouraging trends from the US markets could push the market to open on a positive note on Monday.
“The domestic bourses are expected to remain range-bound. The worst is over and market is just pulling together now. It is expected to perform reasonably well this week if global cues do not turn drastically negative,” PK Aggarwal President Research Bonanza Portfolio said.
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Echoing sentiments that the domestic market would take cues from the global markets later in the day after opening strong, Jain added, “World markets have discounted the news of even the US auto bailout failure in the Senate. If the US benchmark index Dow closes above 9,000-mark, we can expect a 10-15 per cent rally in the domestic market.”
Besides, the expectation of PSU banks announcing a package for the housing sector on Monday is also likely to give a fillip to the domestic bourses.
“Banking and realty stocks have been beaten down heavily in the past few weeks. Now with the interest rates expected to come down, there is a possibility of the sectors gaining momentum and giving positive returns,” Jain said.
Last Friday, the Sensex closed 45 points up at 9,690.
FIIs invested in shares worth Rs 2,048 crore in the current month. Last week they purchased shares worth of Rs 1,765 crore, according to data available on the Securities and Exchange Board of India.
“The FIIs have turned net investors this month and are investing heavily in mid-cap stocks. The week might see a possible rebound in these as the markets have overcome the FII redemption pressure,” Jain added.