On the other hand, the bourses are unlikely to witness any selling pressure since the undertone continues to be bullish. June 30 marks the end of the first half of a fiscal for foreign funds and full year of operations for UTI.

``In the last few trading sessions, we have seen foreign and domestic funds hold up the prices of their key stocks to shore up the NAV with UTI also buying on Wednesday to improve the NAVs of its funds. With June 30 consideration over, funds will revert to a wait and watch policy till the time Kargil issue is resolved,'' said a market participant.

Adds Arun Kejriwal of Woodstock Securities, ``The market is likely to remain lacklustre forthe next few days but activity is likely to pick up with 25-30 stocks going into the no-delivery phase shortly.'' Analysts also point out that some funds have been buying in medium cap stocks with attractive valuations and hence, it will not be reflected in the indices.

A section of the market has been of the view that with the performance consideration over for most of the mutual funds and no solution in sight on the Kargil issue, the Sensex could lose around 150-200 points in the next few sessions. ``The support from foreign funds and UTI has been holding the Sensex above 4100-level but in absence of their support, any negative news can lead to a fall in the Sensex,'' said a dealer with a local brokerage.

The historical data also supports this viewpoint. The Sensex moves up in the month of June, peaks around in the first week of July and then starts its southward journey. In 1997, for instance, the Sensex gained by more than 600 points when it moved up from 3670 level (on May 28) to 4272 level (on June30). The Sensex peaked at 4448 on July 10 but then lost nearly 290 points alone till the month-end.

In 1998, the Sensex lost around 1000 points after the Pokharan blasts. It was only towards the end of June that the Sensex moved from 2954.86 level on June 23 to 3305.63 level on June 30. But the rally was not sustainable as Sensex fell to 2838 levels on July 19. During the current year, the Sensex has rallied by around 400 points in the month of June.

Analysts feel the selling pressure witnessed during the month of July is mainly on account of three factors. First, there is no support from mutual funds. Second, companies announce their first quarter results, which have not been very impressive in the last couple of years. Last, corporates are sellers in the market as they require funds in order to pay their taxes in advance.

However, a fund manager points to the contrary and dismisses the June 30 theory. ``Expectation of a selling pressure after June 30 has become some sort of a ritual although it has nobasis. However, the market may see a correction of 100-200 points if a diplomatic compromise is not reached in the next 10 days. It is because the patience of our forces, which have shown remarkable restraint, is beginning to run out. Although foreign fund managers are worried and sitting on a fence, they are also perplexed since the markets here are holding above the 4000-level.''

Another factor that may lead to a moderate selling pressure is the extent of interest rate hike by the Federal Reserve. While the markets have already factored in a raise of 50 basis points, any bias for further rise in rates may lead to a sell-off, inculding in India.