BSE Sensex seen weak; Tata Moros, M&M may rise

MUMBAI (Reuters) - The BSE Sensex is expected to drop in new year trading on Monday, as continuing concerns about the global economy keep investors wary despite a government decision to allow foreign investors to directly buy stocks.

Automakers Mahindra & Mahindra and Tata Motors could rise after they posted a rise of 26 percent and 22 percent respectively in December sales volumes.

"The U.S. was down, and many Asian markets are also closed, so overall for the day, things look negative," said S.P. Tulsian, an independent analyst in Mumbai.

By 0245 GMT, the MSCI's broadest index of Asia Pacific shares outside Japan was down 0.3 percent, while markets in Japan were shut for a public holiday. Indian stock futures traded in Singapore were up 0.2 percent.

India will allow individual foreign investors direct access to its stock market from January 15, the government said on Sunday, the latest step to liberalise Asia's third-largest economy after a year of big losses in the stock market.

The main 30-share BSE index fell 24.6 percent in 2011, posting its first annual decline in three years.

STOCKS TO WATCH

* Bank of India , State Bank of India , Union Bank of India and other lenders may be under pressure after the RBI released draft guidelines on Basel III capital regulations.

* Drugmaker Lupin may rise after it said on Friday it had received the U.S. Food and Drug Administration's approval for fenofibrate tablets, used as dietary supplement.

* Fertiliser maker Zuari Industries could rise after its joint venture with Mitsubishi Corp <8058.T> bought a 30 percent stake in Peruvian miner Fosfatos del Pacifico for $46.12 million.

(Reporting by Prashant Mehra and Swati Pandey; Editing by Ranjit Gangadharan)