They said market sentiment remains generally firm as most domestic investors are hopeful of the emergence of a stable government after the general elections starting next month.

"I expect the stock markets to consolidate this week," said Jardine Fleming India Asset Management Company chief investment officer UR Bhatt.

"In the absence of any adverse news or heavy selling by funds, I do not see speculators unwinding their positions or investors exiting."

The 30-share index of the Bombay Stock Exchange (BSE) rose 3.52 per cent or 157.94 points last week to Friday's close of 4,645.81.

Speculative and retail buyers bought shares on hopes the ruling Bharatiya Janata Party (BJP)-led alliance would win the elections with a majority.

The hopes were fuelled by two opinion polls which predicted the alliance would win between 322and 336 of the 543 seats in the elections, to be held from September 5 to October 3.

Analysts said second-rung stocks would remain the market focus on the back of retail orders.

"Retail brokerage firms are very active," said Rajesh Jain, director at Pranav Securities. "The broader market will see value-based buying."

Commented Jardine Fleming India Broking director and head of sales Sam Tully: "Going forward, the main issue, for investors, is one of stability. At the moment it looks like a BJP-led administration will be in a position to provide more stability and a sounder basis for economic policy."

Last week's rally took place with a rise in the net long positions of speculators on the BSE to Rs 20.27 billion by the weekend from about 19 billion at the end of the earlier week.

Foreign funds were net sellers of $80.1 million worth of equities in August compared with net purchases of $359.2 million in July, according to data provided by Sebi.

Currency analysts expect the rupee to stay underpressure after it ended Friday at a record low of 43.565/57 per dollar, falling 14 paise (0.14 rupee) last week.

The fall came on fears that the US would hold back some loans in response to India's announcement of a nuclear doctrine and on renewed speculation of a likely devaluation of the Chinese yuan.

But while the rupee is expected to trade weaker until the concerns abate, equity market analysts did not see any significant impact on stocks.

"We have gone through sanctions and we've seen that they really didn't impact the economy," said HDFC Bank head of equities Abhay Aima.

Currency dealers said they expected central bank intervention in the event of a sharp fall in the rupee.