Year-end blues on Street

MARKET WATCH

For the second consecutive week, volatility continued on the Street. The market, however, closed the week on a positive note on the back of bottom-fishing.

Next week, in the absence of active buying by FIIs, trading is expected to be muted. Market players, however, do expect some selective buying by FIIs. "FIIs, including new entrants, are looking at entering the market at the right price," said Suresh Parmar, chief dealer, Darashaw & Co. Parmar believes stock-specific news and sector-specific cues from global markets will drive the markets in the near future.

The coming week is the last one for derivative settlements and some rollovers from December to January contracts have already started. The Nifty has seen a rollover of 37 per cent, while the overall market rollover was 29 per cent. Last week, India saw FII outflows worth $210 million, while outflows from Thailand were higher at $865 million. India and Thailand are the two emerging markets, where FIIs have been net sellers thus far in December.

"The week saw how an international development, like the one in Thailand, can upset local markets even if the development per se is not correlated to our markets," said an analyst with a large brokerage.

According to the analyst, economic concerns, result expectations and (domestic) interest rate outlook are the key triggers in the coming fortnight.

The year-end blues in commodities have been quite evident for the past week, and industrial commodities look bearish in the short term.

Last week, high export growth, increase in FDI and the FDI guidelines for stock exchanges, depositories and clearing corporations have emerged as major positives, supporting the markets at lower levels.

However, rising call money rates "� following the CRR hike "� have started pinching the financial markets, with leading banks announcing interest rate hikes.

The markets are likely remain subdued next week and, even if they see an upmove, these factors may be seen impeding upsides.