Sensex may witness choppy trading

After registering a whopping 50 per cent gain since April this year, the Indian share market is expected to witness choppy trading this week. Traders and analysts see a short-term fall in share prices ahead of the second quarter results to be released next month.

The Bombay Stock Exchange's benchmark equity index, the Sensex, closed last week at 4,305.91 points, down 1.4 per cent on the week. On the National Stock Exchange, the Nifty index lost 1.9 per cent to finish at 1,372.10 points.

"We expect the correction to continue with the benchmark index shedding another 150 points this week," said Satish Menon, chief operating officer, Geojit Securities.

He said corrections are not the end of the bullish phase as they provide further strength to the market.

Share prices fell across the board on Friday led by index heavyweights like Reliance Industries, ITC, HLL and SBI.

Institutional investors and operators opt to book profits in blue-chip stocks after the recent gains. Market players said the index is facing strong resistance at the current level and a sharp correction last week was in line with most previous bull runs.

While foreign institutional investors bought stocks to the tune of $480 million till Thursday, domestic institutions reported selling to the extent of $60 million.

"The index has risen too fast and we expect further corrections in the next couple of days. Strong fundamentals coupled with funds flushed with huge liquidity are currently driving the stock rally," said head of a foreign fund based in Mumbai.

But analysts say a correction will be a short-term phenomenon and the market is likely to touch the key 5,000-mark by the year end.

Improved retail participation and huge inflow of funds from foreign institutional investors are expected to fuel the bull rally.

Investors are also looking for the second quarter corporate results to be released early next month. Expectations have soared after the blue chip companies had unveiled better-than-expected numbers during the previous quarter. Pharmaceuticals, oil and gas, banking and technology counters are expected to witness hectic action backed by hopes of better prospects.

The undertone remained bullish on strong belief that the Indian economy is poised to grow at a much higher rate than actually projected.

Pharmaceutical stocks may continue to draw attention on hopes that the new WTO accord between the rich and developing world will boost generic exports to global markets.

Banking counters are cheerful on reports that the public offerings of UCO Bank and Indian Overseas Bank have drawn excellent response. Analysts say the success of new public offerings may provide boost to the defunct primary market.

Cement and automobile stocks are expected to attract retail investors in the wake of a good monsoon and the government's resolve to promote the infrastructure sector in a big way.

Bull run loses steam
- The index closed at 4,305.91 points, down 1.4pc on the week
- The Nifty index lost 1.9pc to finish at 1,372.10 points
- FIIs bought stocks to the tune of $480 million till Thursday, domestic institutions reported selling to the extent of $60m