NEW DELHI: Dalal Street is expected to see range-bound trading this week in the absence of a major trigger, both on the domestic and global fronts, analysts say.

“While the market is on the rise, it appears that strength is running out as the indices are still moving in a strong range,” said brokerage firm ICICI Direct.

“In terms of valuation and also from a risk-reward trade-off point of view, the domestic market looks somewhat vulnerable and is likely to undergo a downward correction in the near term,” it adds.

Despite the overall increase, the domestic market underperformed most of its global competitors, including China, which grew 19% over the same period.

“Investors are cautious and the market is likely to see sideways trading this week,” said Avinash Gupta, Bonanza Portfolio’s assistant vice president for research.

Analysts further say that, following negative global signals, the market may open Monday with negative bias, but may rebound later on due to fund inflows.

“If we follow the weak US and European markets, Dalal Street could open Monday with a negative bias. However, FIIs are still optimistic about the growth story in India and continued inflows will help the market recover,” said Alex Mathews, head of research at Geojit BNP Paribas.

Foreign institutional investors are positive about the domestic market and injected themselves a net of `5,590 crore in local equities last week, bringing their total investment so far in 2010 to `51,185 crore, according to Sebi data.

“Global parameters will be important to determine the direction of domestic markets,” added Mr Mathews.

On the domestic front, the faster progress of the monsoon continues to be the key driver for the market. The June IIP figures, expected this week, will also be important and should be looked at.

Domestic markets rebounded last week and both indices reached new highs in 2010, as FIIs continued their buying frenzy. On a weekly basis, the Sensex was up about 276 points, or 1.5%, to close at 18,143.99.

Wall Street also fell into the red on Friday due to sluggish job market data and unimpressive retail sales in July. The Dow Jones lost 0.20% and the S&P 500 ended 0.37% lower.

This post Market can be traded in a range but FIIs are sold on India

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