Market likely to trade cautiously

For the week ended December 24, 2004, the BSE Sensex gained 151.58 points, or 2.38 per cent, to end at 6,498.06. The broader, 50-share NSE S&P CNX Nifty index gained 50.60 points, or 2.51 per cent, for the week to end at 2,062.70. A section of the market thinks that bourses are already overheated and a technical correction will be healthy for the safety of the markets.

The market would keenly watch the outcome of the board meeting of Reliance Industries on Monday. Reliance Industries rose over 9 per cent last week. Investors hope the dispute within the Reliance group, which has weighed on markets for over month, will soon be resolved after its chairman offered to return a 12 per cent stake in Reliance Infocomm.

Foreign fund inflows, which have hit the record high of $8.34 billion this year so far, are likely to slow down next week towards the end of the year as fund managers go on Christmas vacation. “While there could be a slowdown in FII inflows the coming week, foreign fund inflows would rise in the coming year with India’s weightage rising in the Morgan Stanley Capital International Index,” said a BSE dealer.

But expectations have started building up over the corporate performance for the quarter ending December 2004. The results are expected to be good, as indicated from the high advance tax payments made by leading companies.

Stability in the global oil prices may help the sentiment to some extent. Dealers expect the volatility in the global oil prices to subside as the winter demand from the US remains modest.