Market may remain volatile on international, domestic cues: Analysts

Market may continue to be volatile in the week ahead as market movements are likely to be driven by global cues as well as domestic factors such as government proposal for a minimum of 25 per cent public holding for listed firms, analysts say. The markets might witness an upheaval following the government proposal for a mandatory public holding of a minimum 25 per cent for listed firms. Close to 300 companies, including blue chips like Reliance Petroleum, TCS, Wipro and DLF as well as PSUs such as NTPC, MMTC, NMDC, Indian Oil and SAIL face the prospect of getting delisted if the government's proposal is implemented. According to the proposed amendments, the promoters, the company and the management would be liable for conforming to this requirement, failing which necessary enforcement action, including delisting, may be taken. The government has sought comments on the proposals by February 28. Analysts also believe market sentiments would continue to remain affected by situations in the global markets. "Uncertainty is likely to persist till any clarity on the international issues is reached ... markets are likely to remain volatile as they are totally aligned to the global situations," brokerage firm SMC Global Vice-President Rakesh Jain said. Although all triggers for the markets have been discounted for, Microsoft's bid for Yahoo gave a positive nudge to the US market on Friday, which could also have a similar effect on the domestic market, Jain added. Microsoft, world’s largest software maker, on Friday offered to acquire leading internet firm Yahoo! Inc for about 44.6 billion dollars with an aim to leverage its position in the online services market. Analysts believe the valuation for Yahoo is substantial considering the recession fears in the US economy. The news also helped markets in the US to surge on Friday. The benchmark Sensex remained flat during the last week despite the Reserve Bank keeping all rates unchanged in the quarterly review of monetary policy, while the US Federal Reserve reduced short-term interest rates last week for the second time in eight days in an effort to stimulate the flagging US economy. The Fed cut rates by 0.5 per cent, bringing its key lending rate to just 3 per cent. On last Tuesday, the US central bank had slashed rates by 0.75 per cent. The Sensex ended at 18,233.42 after gaining over 500 points on Friday last week, its first substantial gain in the entire last week. Besides, analysts believe the only trigger for the market in the near-term could be the forthcoming Union Budget, to be presented at the fag end of February 2008. The budget is also a key factor which would help in near term gains for the market, Jain said. Besides, the foreign institutional investors have been pulling out heavily from Indian market from the start of this year. In January, FIIs have made net sales worth Rs 13,035 crore (about $3.2 billion), while they made net sales worth over Rs 1,700 crore in the past week alone. The wholesale price-based index rose to 3.93 per cent for the week ended January 19, against 3.83 in the previous week mainly due to increase in prices of manufactured items, some food articles and petroleum products.