The Hindu Business Line : Holiday mood may keep market range-bound

The Dalal Street benchmark index is likely to remain volatile, but may stay range-bound week-on-week this week. The four-day week may also see traded volume fall, as the markets all over the world turn on the holiday tune.

Last week, as expected in these columns, the market consolidated under the shade of its peak and overseas funds opted for selective profit taking. Of the five trading days, FIIs were net sellers on four - squeezing out a handsome net profit of around Rs 1,252 crore (taking into account NSE provided provisional figure for the last Friday).

Local mutual funds took the opportunity to enter at lower levels and pumped in about Rs 753 crore.

Trust vote

The global investors have clearly returned to the emerging markets, which have gone up around 26 per cent on an average during 2006 in dollar terms thanks to high gains in BRIC equities, towards the end of the year. Fresh money worth $1.65 billion was placed with emerging market equity funds in the week ending December 13, according to EPFR. This brought year-to-date flows to $20.8 billion, surpassing last year's record $20.3 billion of inflows.

BRIC markets have bounced back steadily from the sharp money pullback during the middle of the year in tune with the changing risk-reward perception. Indian equities at the year-end remain firmly on the global list of medium-to-long-term bets.

More new players are poised to join the bandwagon in 2007. The Japanese, for instance, may double their investments in Indian stocks. Though the European and the North American fund managers still tend to describe the market as red-hot, activity on the Street does throw up indications to the contrary.

Apart from direct investments in the equities, indirect India plays are on the rise too. Two India-focused instruments have hit the US market this month -- Barclays Plc's 'exchange traded note' that would track an index of the blue chip stocks listed on National Stock Exchange and Amvescap Plc's hybrid fund for US and Indian stocks.

This follows two recent India-specific exchange traded funds - listed on Hong Kong and Singapore stock exchanges.

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