Indian share prices may consolidate after hitting record highs following a cut in US interest rates aimed at easing credit concerns, dealers said on Friday. For the week to September 21, the Mumbai stock exchange's 30-share benchmark Sensex index rose 6.15 percent or 960.4 points to a record close of 16,564.23.
The Sensex has risen 5.7 percent since the US Federal Reserve cut rates on Tuesday by 50 basis points as foreign investors have sought higher returns in emerging markets.
"The market remains cautiously optimistic while oil prices continue to rise. We could see some correction next week due to profit booking," said a dealer at brokerage Jamnadas Morarjee.
India's annual inflation rate fell to a near five-year low of 3.32 percent according to official data on Friday, well under the central bank's targets. But economists said they expected no early easing of interest rates, which are riding at five-year highs.
"We expect higher credit growth in coming weeks due to the upcoming festive season. Industrial production data could also pick up, so we do not expect the RBI (Reserve Bank of India) to act in haste (and cut rates)," said Manika Premising, economist with brokerage Edelweiss Capital. "The RBI will continue to monitor inflation trends carefully," she said.
Dealers expect the markets to consolidate at higher levels, ahead of the start of India's second-quarter earnings season in early October.
As of Friday's finish, the Sensex was 20.14 percent higher than last year close of 13,786.91. Overseas funds have invested 10.47 billion dollars in Indian equities so far this year, more than twice the 4.69 billion dollars they pumped in during the same period last year.