Domestic markets are likely to witness consolidation tomorrow, spurred by strong global cues with the US Senate approving the $ 700-billion bailout package and the much-awaited Indo-US nuke deal, analysts feel.
Defying gloomy trend in the global markets, the benchmark Sensex had made substantial gains in the last two trading sessions, jumping as much as two per cent.
"The domestic markets are already oversold and with the new light of hope from the US Senate it is likely that the American markets would move up which in turn will trigger a rally in the domestic market," SMC Global Vice President Rajesh Jain said.
Further, with the Indo-US nuke deal receiving the green signal from American lawmakers, the domestic sentiments are expected to be boosted in the coming days.
Moreover, the US Senate giving a thumbs up for the mega $ 700-billion bailout package for troubled financial institutions would be a shot in the arm for not only India but also global markets.
Following assurance from the Indian government on Tuesday that the Indian markets are well regulated and there is no need to panic, the Sensex shot up 265 points, to settle at 12,860.43, defying weak global trends. For two consecutive trading sessions, the market ended on a positive note and on Wednesday regained its 13,000 key support level.
Experts believe that the Senate approval of the rescue plan, which is expected to have a smooth sail in the House of Representatives, would boost Indian markets.
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"The approval will smoothen the market sentiment, which is at present negative. The approval by the House of Representatives will bring some stability in the market," Asika Stock Brokers' Research head Paras Bodhra said.
However, some marketmen feel that approvals for bailout package and nuke deal were on expected lines and that they are unlikely to cause any major rallies in the bourses.
"The market is currently trading at its support level and would remain range-bound in the near term. Normalcy in the global financial market would bring stability home, but a huge rally is doubtful," Paras added.
The fall in the domestic bourses is in sync with the global markets, which also witnessed a fall after the financial crisis deepened into Europe. This week, the region saw the near collapse of big names like Belgian banking and insurance major Fortis, British bank Bradford & Bingley and German mortgage lender Hypo Real Estate, among others.
Meanwhile, despite assurances from the government on Indian banks being well regulated and capitalised, sentiments of foreign institutional investors were still weak as they invested in equities worth Rs 197 crore so far this week.
"Despite some investment in the past trading sessions, there is no expectation that the FIIs would pump money into the Indian market as of now, as much money is needed in their home countries. Domestic investors are taking the opportunity and investing, which might pull up the market," Paras said.