'Dalal St to witness cautious trading'

Foreign inflow main reason

“Markets are doing well and the relentless buying by FIIs have supported the recent rally. Domestic markets are at their highest level in 30 months and the upward trend is expected to go on,” SMC Global Securities Vice President Rajesh Jain said.

Echoing a similar view, Bonanza Portfolio’s Vice President (Equity & Institutional Sales) R L Narayanan said : “I am cautiously optimist about the market.” Even if the market gets any break that will be arrested by buying at lower level, brokers said.  However, there would be increased volatility this week as settlement for the August series in Futures & Options segment is due on Thursday, brokers said. There is no major trigger due this week and the overseas markets will continue to be closely watched, analysts said.

Demand up

Relentless buying by foreign funds coupled with a fall in inflation and jump in export boosted the market sentiment last week and kept the Sensex well above the 18,000 level, despite heavy selling by domestic funds. FII inflow pushed the Sensex to scale an over two-and-a-half year high.

The 30-share Sensex ended the week with a net gain of 234 points, or 1.29 per cent, to settle the week at 18,401.82.

Food inflation eased to 10.3 per cent for the week ended August 7 compared to 11.4 per cent for the week earlier. Brokers believe that apart from the base effect — which will lead to significant lowering of inflation in the next 3 to 4 weeks — good monsoons will also spell good times for the agriculture sector.

“Consequently, lower inflation will ease the pressure on the Reserve Bank to raise interest rates, which is a positive sign for Indian equities,” they said.