Foreign funds have already invested more than Rs 2000 crores on Friday and are likely to continue to their buying spree, following a slew of reforms including FDI in multi-brand retail and a hike in diesel prices.

However, for the markets to sustain at extremely high levels the government would have to continue announcing policy measures, especially those that do not require parliamentary approval. Any executive decisions that are necessary and if taken will ensure that the markets maintain and sustain their momentum.

There may also be a portfolio churning gradually as investors would now like to bet on momentum stocks, particularly those from the metals space, banking and reality sector.

This is largely in view of the fact that the price to earnings multiples of defensives like consumer staples and pharma have turned expensive and are unlikely to run up any further.

While the markets are expected to continue to witness momentum, analysts warn that the sharp run in stocks has made valuations expensive and it may not be prudent to chase stocks at higher levels, as it could lead to losses.

For the domestic markets to continue firing a lot would also depend on global events. The next few months are likely to be crucial with the elections in the US and the fiscal problems there. Apart from this the problems in Europe could also lead to a sell-off, if things get out of control.

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