Markets likely to be choppy this year: DSP Merrill Lynch

Mumbai, Jan 31 (PTI) It is likely to be a volatile yearfor the equity markets following rise in interest rates andhigh inflation, DSP Merrill Lynch today said.

"The market is going to be choppy this year withflattish returns of about 15-17 per cent due to risinginterest rates, high inflationary pressures and slowdown inIndex of Industrial Production (IIP) among others," DSPMerrill Lynch (a subsidiary of Bank of America) Head of IndiaResearch, Jyotivardhan Jaipuria told reporters here.

This will be more of a year of consolidation, he added.

On sectoral performance, he said, information andtechnology, pharmaceuticals and other sectors, which areconverged on global growth, are likely to do well.

On the domestic front, he said, banking is likely to givegood returns in short term. However, capital good andinfrastructure are going to be better bets for long term.

Talking about fund flows from Foreign InstitutionalInvestors this fiscal, he said, it is going to be less thanUSD 29 billion last year.

"The FII''s flow is likely to be at around USD 16 billionin FY 12, as the money will go into commodity related marketsfollowing rise in commodity prices," he said.

On gold, DSP Merrill Lynch Managing Director, Head GlobalWealth and Investment Management (India) Atul Singh said theprices are bullish and going forward it is likely to touch USD1,500 an ounce on international markets by the end of thisyear.