Mumbai, August 09: Dalal Street may see small bouts of buying early this week amid volatile trade and look for directions towards global markets, analysts believe.
“Volatility would continue in the stock market this week. Profit booking would continue at the higher levels while some buying might emerge as the market falls,” Taurus Mutual Fund Managing Director RK Gupta said.
Analysts said below normal rainfall so far this year has halted a strong bull run on the bourses as monsoon rains is the main source for nearly 60 percent farm irrigation in India and considered crucial for Asia’s third-largest economy.
“The market would consolidate at the current levels before it gives direction. It would take some time for the market to digest the negative news on monsoon,” SMC Global Vice President Rajesh Jain said.
Last week, the Bombay Stock Exchange benchmark Sensex lost 510 points in a volatile trade, on concerns of scanty rainfall.
The stock market ended the three-week bull run on Friday last, with the Sensex settling 3.26 percent lower at 15,160.24 points.
“Profit booking would continue even as initially there could be some bounce back. The market is an unpredictable zone as the bull run is giving way to consolidation,” Gupta said.
“The market will witness sideways consolidation and small bouts of buying will be seen. As the market has fallen quite a lot last week, some upside can be expected now,” Jain said.
Analysts exuded optimism that with the US and European markets settling in the positive on Friday last, Indian markets could witness a bounce back.
With the stock markets in India and China witnessing sharp corrections, FIIs are also pulling out money and investing in their home country which is keeping the market buoyant there. FIIs have pulled out a total Rs 1,094 crore from the Indian equity markets last week.
“FIIs are going back to their home country and participating in the rally there. Also investors are pulling out money from the US bond markets and investing in stock markets which is keeping them in the positive zone.
On Friday the US markets ended in the green with the Dow Jones Industrial Average settling up 113.81 points at 9,370.07 and S&P 500 hitting a 10-year high of 1,010.48 points, up 1.34 per cent. Besides, tech heavy Nasdaq was up 1.37 percent at 2,000.25 points.
–Agencies