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Nifty could remain buoyant aided by resumption of FPI flows, however, the second half of December could see some correction/consolidation as FPIs go away on year-end holidays, HDFC Securities said in a report.

At higher levels, one needs to be stock specific to avoid the pain of entering at high market levels, it said.

Nifty 50 recorded its highest-ever returns in November since the start of the year, led by a dovish US Fed commentary, falling bond yields, and return of Foreign Institutional Investors (FIIs).

Nifty on November 29 touched the 20,000-level for the first time after September 18. The positive sentiment was also driven by dovish comments from the US Federal Reserve which kept rates unchanged in November for the second time, the report said.

FIIs infused $1.1bn into Indian equities during November followed by another $1.2bn on the first day of December alone. DII flows remained strong with inflows of $1.7bn during the month, said Vinay Paharia, CIO, PGIM India Mutual Fund.

“We remain optimistic on Indian equity markets on medium to long-term driven by strong economic growth. However, post the sharp run-up in markets in the recent months, we are cautious on the near-term return potential of the equity markets," the research said.

Easing fears of interest rate hikes by the Fed, a dovish Bank of Japan, easing inflationary pressures and a touch of bargain buying were the key drivers of global stock rally in November, said a research by Jitendra Gohil, Chief Investment Strategist, Kotak Alternate Asset Managers.

The MSCI world, the MSCI EM and the MSCI Asia ex-Japan indices soared 9.2 per cent, 7.8 per cent and 6.9 per cent, respectively, in November. The Nifty Index underperformed with +5.5 per cent gain, but the midcap and smallcap indices outperformed with +9.6 per cent and +10.2 per cent returns, respectively.

"We expect the macro backdrop to remain supportive for Indian equities in light of a weakened dollar index, falling US yields, an increasing probability of a 'soft landing' in the US. FPI ownership is at decadal low while MF & BFI is up at 16 per cent from 10 per cent in 2014," the note said.

FIIs turned buyers of $2.3bn in November after remaining net sellers for two months. DIIs recorded inflows of $1.7bn in November after $3.4bn of inflows in October. FII and DII flows stand at $14.4bn and 20.8bn, respectively, in CY23YTD, as per Motilal Oswal Financial Services.