Markets likely to be choppy this year: DSP Merrill Lynch

This year is likely to be volatile for the equity markets, following rise in interest rates and high inflation, DSP Merrill Lynch today said.

"The market is going to be choppy this year with flattish returns of about 15-17 per cent due to rising interest rates, high inflationary pressures and slowdown in Index of Industrial Production (IIP) among others," DSP Merrill Lynch (a subsidiary of Bank of America) Head of India Research, Jyotivardhan Jaipuria told reporters here.

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

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

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

Talking about fund flows from foreign institutional investors this fiscal, he said, it is going to be less than $29 billion last year.

"The FII's flow is likely to be at around $16 billion in FY12, as the money will go into commodity related markets following rise in commodity prices," he said.

On gold, DSP Merrill Lynch Managing Director, Head Global Wealth and Investment Management (India) Atul Singh said the prices are bullish and going forward it is likely to touch $1,500 an ounce on international markets by the end of this year.