Analysts forecast a mid-week course correction for markets

After hitting a six-month high level last week, the stock markets may see some downward trend on profit-booking by investors, analysts say.

“Stock market has seen one of the biggest run-ups in the recent past. Strong FII inflows have helped the rise. Retail investor interest has also been observed for the last two weeks. Regular profit-booking is advised here,” Milan Bavishi, Research Head, Inventure Growth & Securities said.

Extending the winning streak for the seventh straight week, the the BSE benchmark Sensex gained nearly 541 points last week to close at its highest level in six months of 18,289.35 points.

The sentiments got a boost from expectations of cut in key policy rates by the RBI, pursuant to easing inflationary risks, as also from overseas inflows, the analysts said. Foreign Institutional Investors (FIIs) bought shares worth Rs 4,518.09 crore last week, after purchase worth Rs 4,040.80 crore in the previous week.

Brokers said that profit booking could also take place because of the current week being a truncated one, because of Monday being a holiday, and comprising of the derivatives expiry date. Markets were closed today on account of Mahashivratri.

CNI Research CMD Kishore Ostwal said that “the market is at a huge risk of correction though settlement considerations will keep fire alive till Thursday”. Analysts also said the technical indicators show the benchmark index could be ripe for a correction as it is deep in overbought territory.

“Indian indices will see volatile trading sessions in view of the futures & options expiry this week. Although everybody is waiting for a correction in the market, we cannot time when a pullback will come,” Ashika Stock Brokers Research Head Paras Bothra said.