According to the report by Edelweiss Investment Research, approaching elections, elevated bond yields, emerging market currency weakness and deteriorating current account is likely to keep Indian markets under check.
"Nifty is likely to trade near the 10,000 level in the short term," the report said.
It further noted that "weakness in breadth throws out cautious signal for the trend. This indicates that markets may see another phase of correction."
"We expect Nifty to face another round of selling towards the March 2018 lows".
In March this year, the 30-share sensitive index fell 10.16 per cent to 32,596.54 points on March 23, from a high of 36,283.25 on January 29.
The report further noted that domestic liquidity is holding up the market.
Domestic mutual fund SIP flows have now reached USD 1 billion a month. This is a sizeable and supportive number and has been instrumental in keep stock volatility under check.
"Domestic flows may not be able to dictate the direction of the market but would continue to keep volatile under check," the report noted.
Regarding the earnings growth of Nifty companies, the report said though it was in line with projections but was largely supported by heavyweights.
Excluding these companies, Nifty earnings has missed estimates by 6 per cent, the report noted.