Indian markets are likely to continue their upward trend on fresh overseas fund and retail investor buying this week, but profit-taking may cap gains, dealers said.
Foreign funds have been the key drivers of the Indian stock market since January with investments worth 8.12 billion dollars so far. Some 377.9 million dollars has been pumped into the market this month.
Overseas investments totalled 6.4 billion dollars the same time a year ago.
"We expect profit booking to come in at higher levels and we see a correction of nearly 200 points," said a dealer with brokerage Prabhudas Liladher.
"Beyond this, if this gets absorbed into the system, the markets could move one way up. There is improved sentiment on the economic reform process and with global crude prices easing, several sectors are looking attractive again," he said. The Indian markets have risen by 31.5 percent this year, touching a record high of 8,821.84 on October 5.
"The latest proposal seeking clearance for foreign direct investment-linked reforms - in the gems, mining and banking sector - has improved sentiment further," said Hemen Kapadia, partner with Morpheus Inc, an investment advisory firm.
He said this time domestic funds and retail investors bought across the board, making the rally broad-based.
The Mumbai stock exchange's 30-share benchmark Sensex index closed at 8,686.65 on Friday, up 215.61 points or 2.54 percent from the previous week's close of 8,471.04.