Markets likely to be rangebound this week: Analysts

Dalal Street is expected to see a range-bound trading this week in the absence of any major trigger either on the domestic or global front, say analysts.

"Though the market has been moving up it seems to be running out of steam as the indices are still moving within a strong range," according to brokerage house ICICI Direct.

"In terms of valuation and from the angle of risk-return trade-off also, the domestic market is looking slightly vulnerable and is likely to see some downward correction in the short-term," it adds.

Despite the overall rise, the domestic market has been under-performing against most of its global peers, including China, which has seen 19 per cent rise during the same time.

"Investors are cautious and the market is likely to see a side-way trading this week," Bonanza Portfolio assistant vice-president for research Avinash Gupta said.

Analysts further say following the negative global cues, the market may open with negative bias on Monday, however, it may bounce back later on fund inflow.
    
"Tracking the weak US and European markets, the Dalal Street may open with a negative bias on Monday. However, FIIs are still bullish about the India growth story and a sustained inflow will help the market to bounce-back," Geojit BNP Paribas research head Alex Mathews said.
    
Foreign institutional investors are positive on the domestic market and last week itself they infused a net of Rs 5,590 crore in local stocks, taking their total investment so far in 2010 to Rs 51,185 crore (USD 11.18 billion), as per the data with the market regulator Sebi.
    
"Global parameters will be important to decide the direction of the domestic markets," Mathews added.
    
On the domestic front, the faster progress of the monsoon remains the key factor for the market. The IIP figures for June, which are due this week, will also be important and needs to be watched.
    
Domestic markets recovered during the past week and both indices made their fresh 2010 highs, as FIIs continued their buying spree. On a week-on-week basis, the Sensex went up by about 276 points, or 1.5 per cent, to close at 18,143.99.
    
On Friday, the Wall Street too settled in the red on sluggish jobs market data and unimpressive July retail sales figures. The Dow Jones lost 0.20 per cent and S&P 500 ended 0.37 per cent lower.