Indian shares are likely to slip early this week but foreign and domestic funds should start buying once valuations return to attractive levels, giving the market a boost later in the week, dealers said. On Friday, the Mumbai stock exchange's 30-share Sensex closed at 6,781.99, up 28.99 points from the previous week's close.
Share prices are seen starting the week lower but funds are sitting on large sums of cash that are expected to start being invested once the market comes off its peaks.
"A dip of 100 to 150 points cannot be ruled out from the present level, but after that there will be a fresh rally," said Sanjay Suratwala, dealer at Dalal and Broacha Stock Broking.
He said the expected rally could take the index to as high as 7,500 points by the end of July.
"A lot of funds are sitting on huge cash. They will invest once prices become attractive after a small near-term dip," another dealer said.
Suratwala said an expected settlement of a family battle for control of India's largest private sector company, Reliance Industries Ltd, should push the broad market higher.
"Reliance may rise by at least 100 rupees (2.20 dollars) once the settlement is complete. That could push the Sensex higher along with gains in other blue chips," he said.
The two Ambani brothers - Mukesh and Anil - are engaged in a bitter battle to control the Reliance group whose interests range from energy to telecommunications.
"Apart from Reliance shares, many other large caps will see gains as there is still a huge gap between these shares and mid-caps which have gained significantly in the recent few weeks," a dealer with a foreign brokerage said.
"There is some catching up to be done by large caps as compared with the mid-cap shares."
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