The Indian market is likely to open higher on Monday amid positive Asian cues. Additionally, Prime Minister Manmohan Singh’s statement that the worst for Indian economy is over may help improve sentiment.

“India today is better positioned to push through reforms. Foreign investors today are welcome to participate in the country.” he said and indicated that the government is likely to exit the stimulus packages next year.

Market direction may also hinge on the movement in the forex market. That said, profit taking by several FIIs is not ruled out ahead of the calendar year end. Some traders may prefer to stay on the sidelines ahead of the release of the industrial production and inflation reports on Thursday.

Clearly, investors are cautious about the market in the near-term, especially in the large-cap space as their valuations have run out of steam. Certain small and midcap stocks may offer attractive returns, analysts say. However, investors have to be selective as these stocks could prove too risky if the market enters into a deep correction mode. In terms of returns, while the benchmark Sensex returned a little more than 50% in the last year, both small and mid-cap indexes jumped by about 80%.

On Wall Street, a subdued reaction to monthly employment figures kept the major averages near the unchanged mark on Friday. The market remained week initially on the heels of the release of a report from the Labor Department that showed employment fell by more than expected in the month of October. However, it moved higher later on in the day on bargain hunting and ended with modest gains. While the Dow closed up 0.2%, the Nasdaq and the S&P 500 rose by 0.3% each.

Source: ino.com