Stock markets likely to see consolidation this week

The stock markets may undergo a phase of consolidation, with investors taking home profits, in the wake of the substantial gain of 973.89 points registered last month, say experts.The Bombay Stock Exchange Sensex saw impressive buying in the week gone by, with the key index advancing by 604.75 points, or 3.21 per cent, to close at 19,420.39 on Friday, driven by almost $2 billion worth of Foreign institutional investors (FIIs) inflows.

Also, in the previous month, the broader Sensex surged by 973.89 points, or 5.27 per cent. According to market experts, after a healthy March, the stock market may see some profit-booking in the coming week as after such large swings, investors generally want to lock-in gains.

“I believe markets will undergo a phase of consolidation. However, considering the vigour with which the markets moved during last week or so on the back of short covering, followed by fresh long side build-ups, we feel the stage is getting set for a bigger move upwards,” Padmakshi Financial Services Ltd Vice President – Research Anand Kuchelan said. However, analysts also opine that concerns like inflation, rising crude prices, interest rates still persist, which the stock market has to battle in the days to come.

“Though the market has turned around commendably over the past few days, the core concerns on inflation, rising crude prices, interest rates and governance still persist. It is likely that the market consolidates in the days to come. The trend, going ahead, will also hinge on whether FII inflows continue to remain positive or not,” IIFL Head of Research, IIFL- India Private Clients Amar Ambani said.

Last week, the bellwether Sensex also reached the 19,000-level after a gap of two months on the back of buying by foreign funds, who are the main market movers.