The index, rose 1.25 per cent to close above the crucial 3,100 level on Friday. The marker rose 1.7 per cent on the week and has added 4.4 per cent in August so far, aided by a gradual return of foreigners to the market.
Except for some concerns about the impact of drought, the market is on a firm footing, said London-based Tim Dickson, a fund manager at F&C, which has about $200 million invested in Indian markets. Local investors watch investment by foreign funds closely for direction. Last week, offshore funds made select purchases and their net purchases in Indian equities totalled $38.3 million after weeks of sluggish inflows.
We expect the index to find support at 2,900 levels and on the higher side, it has the potential to scale 4,200 levels over the medium term, Dickson said.
Brokers said Wall Street would guide short-term sentiment, while investors would also keep an eye on local factors such as the governments privatisation drive and domestic institutional activity. On Friday, Nasdaq dropped 2.97 per cent to 1,380.62 points, while
Dow Jones Industrial average, shed two per cent to 8,872.96 points. The index could extend its gains after breaching the crucial 3,100 level. The index may start lower because of Wall Streets weakness, but later it could extend last weeks gains.