The report says the Indian markets normally start looking up in late December or early January because traders begin taking positions ahead of fresh fund allocations to the emerging markets.

The market starts to peak around July as investible funds have been invested and some amount of profit booking starts. Year 1998 was the year of software companies. The explosion in the valuations of software companies spread to other sectors on optimism over business friendly policies of the new government and contributed to the bull-run of 1998. The run ended on profit-taking after the the imposition of sanctions post-nuclear tests.

SBI Capital Market says next year may turn out tobe a good year for the Indian stock markets, barring political uncertainty and assuming a stable external environment.

On the way up, the market should fund resistance around 3200, 3500, 3700, 4000 and 4200.

The software story is expected to continue in 1999; pharma sector valuations are also likely to be buoyant.

However, the sector valuations would be led by MNCs after the Patents Bill is passed. Commodities like cement, which are protected against imports, may see a better year if the proposed spending on infrastructure happens. Various power projects are approaching financial closures and some of these could be worth watching.

In the automobile sector, two-wheeler manufacturers are likely to do well and in the refinery sector, margins are likely to improve further.