MUMBAI, Dec 30: Investors expect listless trade early in the new year with some overseas funds seen on the sidelines until new portfolio allocations are made in coming weeks.

The 30-share Mumbai stock exchange Sensex closed down 0.43 per cent on Friday as investors steered clear of building fresh positions ahead of the new year, ending 2006 with a nearly 47 per cent gain.

They said the rise for the Sensex marked the fifth straight year of growth led by strong economic expansion.

The Sensex closed Friday down 59.43 points to 13,786.91, up 315.17 points or 2.3 per cent over its previous week's level of 13,471.74.

Investors said the market was expected to remain stable despite concern that the Reserve Bank of India would raise interest rates early next year.

“There is enough buying momentum, but volatility and selective buying will be seen ahead of the third-quarter corporate earnings,” said Atul Hatwar, dealer with brokerage Crosseas Securities.

India's second-largest software exporter Infosys will report third-quarter earnings on January 11.

The Sensex crossed the historic 10,000-point level in February this year, a momentum which took it to 12,671.11 on May 11. The markets slid more than 30 per cent from there on inflation worries to an intraday low of 8,799.01 on June 14.

Strong June-end quarterly corporate earnings and local and foreign fund buying have seen Indian shares gain over 38 per cent since mid-July.

By December, the Sensex crossed the historic 14,000-point level, hitting an all-time peak of 14,035.3 on December 6 before tailing off marginally by year-end.

Strong economic growth remains the key trigger, with India’s GDP for the first half of the fiscal year ended September hitting 9.1 per cent. The central bank has forecast full-year growth of 8.0 per cent.

Last year, the index climbed by 42.3 per cent as India’s booming economy drew investor interest. Foreign funds purchased a record $10.7 billion worth of shares during 2005.—AFP