"The [Hang Seng Index] is expected to trade between 13,800 points and 14,500 and may see greater fluctuations on New Year's Eve, " said KGI Asia head of research Ben Kwong Man-bun.

He projected intraday volatility to exceed 500 points on Wednesday.

Kwong said aviation, raw material, property, industrial and banking stocks, which are sensitive to the economic cycle, are likely to risk correction this week.

"The Hang Seng Index may test 15,000 as fund managers tend to window-dress at the end of year," said Delta Asia Financial head of equity markets Conita Hung Lai-ping.

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She believes the Hong Kong market will benefit from the news that the US Federal Reserve allowed General Motors' financing arm to become a bank holding company last week, a move which relieved the automaker's credit crisis and lifted the US market.

"The index will have support at 14,000, unless there is more negative news in the market," said Hung.

The Securities and Futures Commission and Hong Kong Exchanges and Clearing (0388) last Monday reminded exchange participants and investors of possible increases in securities trading activities and the risk of unusual price movements around December 31.

With Hong Kong still in a festive mood, both Kwong and Hung expect investors to sit back in the remaining trading sessions before the new year to prepare their investment plans for 2009.

"Investors may adjust their portfolios starting next week and this will bring more uncertainty to the market," said Hung. She said the mainland stock market will continue to be under pressure due to a bigger supply of tradable shares after their lock-up period expires. But she added the impact on the Hong Kong market will be indirect and will be offset by the effect of the futures settlement.