Market sentiments are likely to remain positive this week. Analysts say inflow of liquidity

RELATED ARTICLES Sensex ends flat; outlook still weak Govt may soon take decision on FDI in aviation, retail 2 panels to launch review of Facebook IPO Tapi pipeline perfect example of energy diversification: US Sensex regains 16k level; ends 274 pts higher

will remain strong and there is a good possibility that benchmark indices may reach all-time high anytime soon. However, they do not rule out the possibility of a small correction and some consolidation afterwards.

“The market is moving a bit ahead of valuations and there is a scope for correction. However, the momentum looks good right now. There is liquidity in the market. Banking is one sector that we feel still has the potential to give good returns. Aviation, cement, IT and automobile counters, too, look good bets. The September quarter results will be healthy and the long-term outlook is intact,” said Vikas Khemani, head of institutional equities at Edelweiss Capital.

Khemani said big IPOs, such as Coal India, which will hit the market this month, may trigger a correction in the market.

However, senior assistant vice-president for research at Jaypee Capital, Abbas Merchant, does not expect IPOs to impact liquidity in the secondary market. “We don’t feel new IPOs may have any major impact on trading in the secondary market. The market will remain positive, but it could consolidate a bit.”

Karvy Broking vice-president Ambareesh Baliga is positive on the market and felt the indices could breach their all-time highs soon. He said liquidity would remain smooth going forward.

The rate of inflation for food articles rose to 16.44 per cent for the week ended September 18 against 15.46 per cent in the previous week.

The Sensex climbed 399.86 points, or 1.99 per cent, last week to end at 20,445.04, posting gains for the fifth consecutive week. The 50-stock index added 125.10 points, or 2.08 per cent, to 6,143.40.

The results season will kickstart this week with pharmaceutical firms such as Pfizer, Wyeth and Piramal Lifescience, announcing their September quarter numbers.

On the US front, data on factory orders, pending home sales for August and weekly jobless claims may provide some cues to the domestic market. Most European markets were down last week on concerns over the slowdown in the region’s growth on account of sovereign debt crises. Investors are likely to watch European cues keenly.

Marketwide rollover to the October series of derivative contracts remained healthy at 81.05 per cent and most positions were on the long side, according to Angel Broking. “Open interest in stock futures is above Rs 52,000 crore, but leverage per person is far less compared to January 2008 as number of stocks and number of participants have increased substantially since then. So, we feel the market is not over-leveraged.”