Dalal Street is likely to witness consolidation this week and investor sentiment may improve while looking for direction from global markets, said analysts.
“Markets are in a consolidation mood and most of the global markets are still in the negative zone and consolidating in a sideways range,” SMC Global Vice-President Rajesh Jain said.
Last week, the domestic markets remained uncertain, looking for directions in the absence of any major happening in both the domestic or international arena.
“Markets may see higher levels this week, while the wide-based Nifty index can go up to 4,400-4,420 levels, where the market may face resistance and on the downside the 4,300 level can provide support,” said P K Agarwal, president (research), Bonanza Portfolio.
Last Friday, the BSE Sensex jumped over 500 points to settle at 14,564.53, buoyed by a fall in inflation, which came as a relief after a long time. Such was its impact that even a moderation of the GDP growth rate to 7.9 per cent in the first quarter of this financial year, failed to mar the tempo.
Inflation for the week ended August 16 fell to 12.40 per cent from 12.63 per cent in the previous week. It was for the first time that inflation had fallen in a month and analysts believe this could propel the market to remain in the green this week.
Some analysts, attributed the spurt on Friday to short-covering by traders. Jain said the sudden jump in the market on Friday was due to major short-covering as it was the first day of clearing.
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NSE’s 50-share Nifty index had risen by 146 points at 4,360 last Friday. Marketmen also feel that the outcome of the Nuclear Suppliers’ Group (NSG) meeting, scheduled to begin on September 4, would be closely watched by investors as it would decide the fate of the Indo-US nuclear deal.
Moreover, Jain added that FIIs are still sitting on the fence as they have remained major sellers in equities this year and would need a strong positive trigger to start buying in the domestic market.
Foreign institutional investors (FIIs) have made a net sale of shares worth Rs 1,211.70 crore in August so far, while they have offloaded equities worth Rs 28,513.60 crore in the calendar year 2008. Meanwhile, mutual funds sold shares worth Rs 700.40 crore in August so far.