Markets set to begin 2010 on positive note

The stock markets are likely to start on a positive note on the first day of trade in the new year tomorrow although no major rally is expected.

Significantly, the new year will also witness the Dalal Street waking up an hour early from tomorrow with the opening bell ringing at 9am.

Brokers said the market will continue to trade on the higher side in line with the movements witnessed last year, as liquidity is still ample in the system.

"We will have a positive opening in the market on Monday. However, profit-booking would set in during the day which would keep the market range-bound during the week," Geojit BNP Paribas Financial Services research head Alex Mathew told media.

Signaling that optimism is prevailing in the market on the back of strong liquidity inflow, Unicon Financial chief executive Gajendra Nagpal said, "new money would pour in at high valuations. Also foreign investors would return to the market which will keep the market buoyant."

Marketmen said the National Stock Exchange's Nifty 50 would trade in a narrow range of 5,142-5,250 during the week and any decisive movement in the market can be seen only from Thursday. During 2009 stock markets have surged as much as 81 per cent to 17,464.81 points, making it the biggest yearly rise since 1991. The markets had fallen about 52 per cent in 2008.

Analysts are hopeful that the foreign funds would continue flood the domestic markets in 2010 till the condition in the US markets become stable.

"FIIs would come into the market after the long holiday break. However, no immediate rally is expected after the big gains of 2009," SMC Global vice-president Rajesh Jain said.

Analysts said investors should increase their allocation in the Mid-cap stocks in 2010 as their returns would be better than the frontline stocks. "Investors have strong conviction that the economy will grow going forward. The way we closed 2009, it raised expectations that fresh money would continue to come in at higher valuations," Nagpal said.

However, Jain added, "the US markets have taken a reaction on the last trading day. A small correction might be on the cards here as well."

On Thursday the Wall Street ended in the red with the Dow Jones ending down 1.14 per cent at 10,428 and S&P 500 settling one per cent lower at 1,115.10.
~ET