Indian shares are 1 per cent away from a record high and a confident market may try to test the peak on Tuesday, but cues from overseas will be limited as most markets are shut for the New Year's Day holiday.
The benchmark 30-share BSE index closed 0.4 per cent higher at 20,286.99 points on Monday, and is now just 1 per cent away from its December 13 record high of 20,498.11.
The stock market rose 47.1 per cent in 2007, its strongest growth in four years, just ahead of a 46.7 per cent rise in 2006.
"The index overall could be range bound and the market will continue to trade the way it did on Monday," said Ambareesh Baliga, vice president at Karvy Stock Broking Ltd.
"The action in mid- and small-cap stocks may take it to a record high," he said.
Analysts expect the market to rise in 2008, but at a slower pace than last year. A possible moderation in the growth of company earnings, the risk of a US slowdown and maintaining record overseas fund inflows are seen as the main challenges.
Foreign funds bought more than $17 billion worth of Indian equities in 2007, as at December 28, a record for a single year.
The 50-issue NSE index ended 0.97 per cent up at 6,138.60 points, finishing up 54.8 per cent for the year.
Stocks to watch
* Marksans Pharma Ltd after the drug maker said a unit will buy out UK-based Hale Group and its subsidiary for an undisclosed sum.
* Apparel retailer Koutons Retail India Ltd after its board approved acquiring DBG Retail Holdings Ltd.
* Arvind Mills Ltd after the National Stock Exchange curbed creating fresh derivatives positions in the stock as open interest had crossed 95 percent of the market-wide position limit.
* CS Software Enterprise Ltd after its board approved buying 51 percent in US-based Reps Resources Inc.
* Crazy Infotech Ltd after the company said its board will meet on January 7 to consider a stock split and raising funds overseas.