By Rohit Vaid Mumbai, Sep 4 : Persistent foreign capital inflows on the back of buoyant global cues as well as domestic macros are expected to further accelerate the rise of India's key stock indices in the upcoming week. Accordingly, FPIs expect an accelerated economic recovery in India based on healthy macro numbers and monsoon rains. They now await July industrial production figures slated to be released next Friday. However, market observers cited high valuations along with chances of profit bookings as key factors that can cap gains and flare up volatility. Last week, India's benchmark indices registered strong gains aided by positive global cues, encouraging macro data and FPI inflows. Consequently, both the NSE Nifty50 and S&P BSE Sensex closed the week at record high levels. The Sensex rose 3.6 per cent and the Nifty gained 3.7 per cent over last week, its second consecutive weekly gain and the largest in seven months. "US payrolls data has come in much below expectations, fuelling anticipations that the US Fed will keep providing enough stimulus to revive the US economy," said Deepak Jasani, Head of Retail Research, HDFC Securities. "This could support FPI inflows into the emerging markets, including India. Nifty could take support from 17,153 while 17,480 could act as a resistance in the near term," he added. Lately, strong liquidity has boosted the domestic market with FPIs pumping in Rs 6,800 crore in the last few sessions. "Going ahead, the market is likely to continue with its positive momentum as economic recovery and vaccination continue their northward journey. However, valuations are also moving beyond the comfort zones and hence could lead to bouts of profit-booking and increase in volatility," said Siddhartha Khemka, Head, Retail Research, Broking and Distribution, Motilal Oswal Financial Services. "Large caps offer better margin of safety in the current environment and could continue to remain in focus in the near term as well," he added. Recent data points such as GDP, PMI and GST collections have indicated a healthy economic recovery. "Strong domestic economic numbers are supporting the upward movement in the market even in these high levels of valuation. The domestic front is awaiting the release of a major economic data -- the industrial production data for July," said Vinod Nair, Head of Research at Geojit Financial Services. According to Joseph Thomas, Head of Research, Emkay Wealth Management: "The developments around the US economy, the revival of activity in Europe - both in the face of rising number of fresh infections - would also be factors that would matter in the coming week." (Rohit Vaid can be contacted at rohit.v@ians.in) /IANS