New Delhi, March 3 : Corrections in mid and small caps are underway and expected to continue, with regulators urging disclosure of associated risks to AMCs, says Vinod Nair, Head of Research, Geojit Financial Services.

Banking stocks reversed initial weakness to perform well on the back of an improved economic outlook, while weakness persisted in the IT and pharma sectors, which are more closely tied to the global economy, he said.

The release of additional data from the US, such as PMI and payroll data, along with inflation data from China, may influence market dynamics moving forward, he added.

At the onset of a week laden with economic data releases, investor sentiment appeared cautious. However, indices surged in the final session, propelled by stellar Indian GDP figures and a healthy performance in the Indian manufacturing sector as output and new order picks up, he said.

While robust economic data boosted confidence in the Indian economy, concerns lingered regarding the RBI's policy decisions amidst high liquidity and inflation worries, he added.

On the global front, in-line US personal consumption expenditure data and benign Euro zone, inflation may influence global central banks to take a dovish view on interest rates. US bond yields dipped after the inflation data release, also supporting the equity market.

/IANS