Trading in stock markets is likely to be range-bound this week amid sluggish foreign fund inflows, mixed corporate results and continued weak investor sentiment, analysts said.
"On account of a holiday on May 1 the week will be a truncated one. It will be interesting to see if volumes return to the market over clarification on General anti-avoidance rule (GAAR). Results and global events will dictate market direction," Sharmila Joshi, Head Equity, Fairwealth Securities said.
Analysts also said without a turnaround in the FII flows, markets may continue to drift sideways. Investors should trade in a stock-specific manner rather than sector-specific.
The government's anti-tax avoidance rule, GAAR, proposal announced in the Budget has been a major dampener for several FIIs whose clients have used participatory-notes (P-notes) to invest in the Indian market and has been driving away FIIs, experts said.
"The market is going to be range-bound this week. For the last one month markets have been trading in a 150-200 points of range and unless this is broken, we cannot see much movement. Uncertainty over GAAR is not letting FIIs contribute much to the Indian equity market," Ashika Stock Brokers Research Head Paras Bothra said.
Bonanza Portfolio Research Analyst Shanu Goel said: "Next week corporate results of Hero MotoCorp, Bharti Airtel will influence the market trend. Important support for Nifty exists at 5,130-5,125 levels and below this next important support is at 5,070-5,050."
Last week, the BSE benchmark Sensex dropped by 187 points to end at 17,187.34 on fresh selling pressure by investors after global rating agency Standard & Poor's cut India's long-term credit rating outlook to negative from stable.
S&P cut its outlook citing a slowdown in investment and economic growth and a widening in the current account deficit.
