Hopefully, the bulls will have learnt from past experience and will not go overboard with any sudden spurt. After a strong rally, we expect a subdued start as global markets have not extended this weeks spurt. However, the trading range could shift to 4900-5000 for the Nifty. A fall back to 4800 is not ruled out though and resistance is likely to kick in upwards of 5000. FII flows should turn positive, Budget should not disappoint and global situation must improve for a sustainable and meaningful advance above 5000.
Stocks in the budget-sensitive sectors could see action in the run-up to the big event. So, sectors like railways, power, infra, education, healthcare, fertilizers and textiles could hog the limelight. PSU oil marketing companies will gain in the wake of the reformist recommendations of the Kirit Parikh panel. The big question is will the Government bite the bullet on oil sector deregulation? The Government will also be hard pressed to return to the path of fiscal consolidation given the postponement of the 3G auction and expected shortfall in disinvestment proceeds.
Rising inflation and its fallout on the monetary policy could act as a dampener going ahead. Uncertainty over external factors like overheating in China, debt troubles in EU and fragile recovery in parts of industrialised world will continue to undermine sentiment.
Talking of global markets, private sector payrolls for January were down 22,000 in the US, the fewest since January 2008. Wall Street is now girding for Friday's employment report. There is a growing belief that job losses in the US economy are moderating.
As far Europe is concerned, Greece is not the only eurozone nation with debt problems, Spain and Portugal seem to be catching up fast. Outside the currency block, there could also be potential debt troubles in the UK and Japan.
