Trade in Indian shares in this week is seen remaining cautious with prices under pressure amid a drying up of overseas fund flows and concern about rising crude oil prices, dealers said.
Profit-taking resulted in the market closing lower than in the previous week, breaking a 16-week run during which Mumbai's benchmark Sensex index posted continuous weekly gains.
The 30-share Sensex index ended Friday at 7,680.22, down 100.5 points from the previous week's close of 7,780.76.
"We expect the corrective phase for the markets to continue. These high levels for the index clearly mean times of caution for retail investors," said a fund manager at Sahara Mutual fund.
With global oil prices at 68 dollars a barrel, dealers say there will be an impact on inflation and key sectors such as automobiles and steel. A rise in domestic petroleum products is seen as on the cards.
A concern for local mutual funds and retail investors is that some global equity research firms say Indian markets are "overheated" and that valuations are stretched compared with other emerging markets. Some foreign brokerages say a sharp correction is ahead for Indian markets and forecast the Sensex could dip by a six to 10 percent in coming weeks.
Overseas funds bought a net 7.38 billion dollars worth of Indian shares in the January-August period compared with 4.3 billion dollars for the same year-earlier period, according to official figures.
Foreign funds net investments in India for calendar 2004 totalled 8.5 billion dollars.
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