Markets may witness pre-budget rally

After witnessing a sharp selloff for better part of the week, a relief rally during the later part of the week helped Indian markets cover most of the losses.

The Sensex and the Nifty ended the week in the red for the third straight week with marginal losses at 24,436 and 7,422. It is pertinent to observe that in contrast to persistent selling from FIIs, domestic institutions including mutual funds and insurance companies have pumped in over Rs 10,000 crores into the stocks since the start of the year.

A surge in crude oil prices, indications from ECB over another round of stimulus and no major disappointment in Q3 earnings have improved the investor sentiment.

After the announcement of National Tariff Policy for electricity, sources indicate more market friendly moves from the government before the Budget. A pre-budget rally is on cards, say experts.

Trends in global markets, FII activity, movement of the rupee against the dollar, crude oil prices and also third quarter results will dictate movement of the market in the near term.

For the week ahead, chartists predict trading range of 2,3850-25,000 and 7225-7610 for the Sensex and the Nifty. Immediate supports for the indices are at 24,150 and 23,850 and 7,340 and 7,240. Investing is as much about psychology as numbers. Selling out of fear is almost always a mistake. The market rewards optimists and pragmatists. Trying to win in the markets without a trading plan is like trying to build a house without blueprints-costly (and avoidable) mistakes are virtually inevitable. Speculation demands cool judgment, self-reliance, courage, pliability and prudence.