Abhijit Chakraborty of Edelweiss Capital said more people are coming to the markets to buy ideas. Risk appetite has been marginally positive. It is helping investor sentiment in India. But he thinks it's pretty unlikley for markets to retest recent bottoms. He expects to see rangebound markets which may trade in the range of 6-7% on the upside.

Domestic investors have been cautious, he said. Currently they don't expect more than 15-20% upside. But He doesn't expect a very sharp fall in the markets.

Excerpts from CNBC-TV18's exclusive interview with Abhijit Chakraborty:

Q: The month up until now has been flat is what we will get away with or there might be a case for weakness?

A: The way we look at markets now, they slowly but steadily have picked up an interest in investment by a wide range of investors, more people are coming to the markets for buying ideas. Internationally things are helping right now. As an emerging market, we are still one of the worst performers that makes a case for more money to flow into our markets currently. Risk appetite has also marginally been positive as far as the developments in US is concerned, so those are the things that are helping the investor sentiment in India.

Locally, there are a lot of concerns, which remain coming out of government action containing inflation. So yes, my sense would be that we have made the bottom and it would be very unlikely that we will see or retest the bottom once again very soon. But given the fact that there is a pull and pressure because of international scenario as well as domestic concerns, we might continue to see in a range bound market, where market can react to news events and may be trade in a range of 6-7% either side.

Q: The domestic money has actually been very skittish this month and the mutual funds have pulled out close to Rs 800 crore or more than that in the past six days. Do you think the market might see a deep cut if not now over the next few weeks or are they just protecting some capital right now?

A: The domestic investors are very cautious, they are treating the market in a very cautious manner. Currently, the view in the market is that you cannot expect more than 15-20% upside on the stocks, where you think there is an investment case. So we will continue to see bouts of profit booking in sectors, which have run up that is exactly what has happened in the last one month or so. We have seen a very decent bounce back in Indian markets, so there is a sectorial profit booking happening by Indian mutual funds.

But I don’t expect a very sharp fall in the markets from here.  There is going to be a sector rotation, may be money will flow out of one sector where there has been run up and will move to somewhere else, where valuation is till compelling.