The stock market is likely to continue its upward movement with key indices gaining momentum and ending in positive terrain in the last week, say dealers. The optimism is based on the fact that US markets ended on a very firm note on Friday.

Stocks rallied to their biggest weekly gains since mid-April after oil prices tumbled more than $4 a barrel on Friday. Crude oil fell 7.9% during the past week, tumbling to settle at $115.20 a barrel. Crude is now 21% below its record close, set on July 3.

The Dow Jones Industrial Average (DJIA) gained 3.6% and the S&P 500 index advanced 2.9%, while the Nasdaq Composite has one of its best three consecutive weeks when it gained 4.5% during the week. On a weekly basis, the 30-share Sensex of Bombay Stock Exchange (BSE) managed to gain 511.13 points, or 3.49%, while S&P CNX Nifty of National Stock Exchange (NSE) added 115.95 points, or 2.63%.

On Friday, the last trading session of the previous week, Sensex added 50.57 points, or 0.33%, before finally closing at 15,167.82 points. The NSE index gained 5.65 points, or 0.12%, and closed at 4,529.50 points. But surging inflation and easing crude prices, coupled with global cues, will determine the market direction for the next week.

There are, however, renewed threats over oil, which has eased down in the recent past. If Russia ?s movement of troops into neighbouring Georgia begins to threaten oil or gas facilities, there could be a market reaction, foreign websites reported. CNBC.com quoted an analyst who said oil is now oversold and should be trading about $5-$7 higher.

?If the sell-off is based on the premise that demand is contracting not only in the US but in Europe and the developing world as well, then I think there?s a level of economic activity that would mean it should be higher than this.?

Dealers back home said the crucial Sebi board meeting scheduled on August 13, where the regulator is expected to review the Securities Lending and Borrowing Mechanism (SLBM) and the norms related to issuance of participatory notes (PNs) by the foreign institutional investors (FIIs), will also be keenly watched by the market participants.

Anita Gandhi, head of institutional business, Arihant Capital Markets, said, ?Despite weak global cues last week till we closed for trading, domestic markets have performed positively. I think this is a sign of consolidation. But in order to move ahead of the current level, markets should remain in the positive side for the first few days of the next week.?

Though inflation above 12% and volatility in crude price are still prevailing, it will be a difficult task to perform, added Gandhi.

PK Agarwal, head -research, Bonanza Portfolio, said, ?The most important factor responsible for the markets to perform in the positive note has been softening of crude oil prices. Even gold prices have fallen below $870, which was considered as support thus giving negative returns for the week.

Going forward, commodity prices shall be correcting and thus inflation, in most of the economies specially the emerging ones should start topping out. Slowdown in commodities may also move funds to equities.

Indian markets are likely to remain firm and continue with its upward movement next week. However, markets are likely to remain volatile in view of truncated trading week due to a holiday on account of Independence Day that falls on Friday and participants may resort to profit booking ahead of the long week-end.?