Indian stocks could decline from current levels this week as overseas sentiment for emerging markets seems to have dipped, dealers said. India's Mumbai stock exchange fell 3.4 percent in the past week, the sharpest decline in the past six months.
The exchange's 30-share benchmark Sensex index shed 289.8 points to 8,201.73 on Friday from 8,491.56 a week ago.
Overseas funds have been net sellers of Indian shares in October for the first time this year at 136.5 million dollars. But overseas funds remain net buyers on the year with investments of 8.45 billion dollars.
"The worst is not over. We expect to see more choppiness this week as the corrective phase has set in. There could be buying opportunities at lower levels though we would advise investors to exercise caution at these levels," said Hemen Kapadia, partner at investment advisory firm Morpheus Inc.
Technical analysts now say the next crucial level for the benchmark Sensex is 8,100 points and then 7,850.
Infosys Technologies and Tata Consultancy Services, India's two largest software companies, posted strong earnings last week for the quarter ended September 30.
Other leading Indian companies are expected to report strong earnings this month linked to a booming economy which grew 8.1 percent in the quarter ended June 30.
"If the markets remain choppy select stock buying may be seen this week," said a fund manager with a leading domestic brokerage.
Dealers said that earnings will be the main focus of the market for the rest of the month with several major companies, including Reliance Industries, yet to report quarterly numbers.
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