As the festive season kicks off in the country, Dalal Street has become the cynosure of all eyes. The sensex has already gained nearly 1,200 points in just 14 trading sessions this month, closing with gains on 10 occasions. According to analysts, FII inflow may cross the $10 billion-mark by the end of this month as a hefty $9.8 billion (Rs 47,674 crore) has been poured into the bourses by overseas entities so far this year.

Will the sensex scale new highs this festival season? Analysts are keeping their fingers crossed for now but they expect some volatile trading sessions this week, mainly because of the coming derivatives expiration on Thursday.

Moreover, Monday is a trading holiday because of Eid and hence traders will have just three sessions before the settlement of September contracts. Due to the settlement in futures and options segment markets will be in consolidation phase, but uptrend will continue, Paras Bothra, head of research, Ashika Stock Brokers, said.

However, looking beyond the settlement, market sentiment is likely to remain bullish even as investors will be cautious, analysts feel. There is a meeting of the US Federal Reserve also scheduled for this week. The market is expected to remain sideways ahead of the clearing date for derivatives.

It may consolidate at these levels, while the movement will remain on the upside as the picture overall is very rosy, Rajesh Jain, VP, SMC Global said. Last week, although the BSE sensex gained 477 points, or nearly 3%, to close at 16,741 points, the last two days it struggled to close higher than previous closes.

Although valuations are reasonable, technically some correction could set in soon. The markets have reached an oversold zone and this week it will be choppy and will consolidate at these levels for a while, Avinash Gupta, VP-Research, Bonanza Portfolio, said.

During the week, FIIs have put in over Rs 5,300 crore in Indian equities, a large chunk of it because of the Rs 3,200 crore placement of RIL treasury shares. Bothra added that FIIs are bullish on the Indian markets and they will for now keep investing in the domestic bourses.

US Fed will meet on September 22-23 to discuss the state of the US economy and to discuss the financial policies and the Indian markets will cautiously look at the situation, Jain added.

FII inflows in the Indian equity market would continue in the coming days and it may cross $10 billion level by September-end, Tarun Sisodia, director & head of research, Anand Rathi Financial Services, said.

So far this year, FIIs have net bought shares worth nearly Rs 48,000 crore, according to Sebi data. The infusion of money by overseas investors in shares is a part of their portfolio management in various emerging markets and India is part of that strategy, Sisodia, who is based in Mumbai, said. And so far this month, foreign investors have infused over Rs 7,400 crore ($1.5 billion).