Dalal Street is expected to witness a pre-budget rally this week if the global markets manage to stabilise, but bouts of volatility are likely to persist, analysts say.
"A pre-budget rally is likely to set in only if global markets stabilise a bit, however, bouts of heavy volatility will continue to impact the bourses," SMC Global Vice President Rajesh Jain said.
The benchmark index, Sensex, dropped about 700 points during the past week to end at 17,349.07, down 385 points on Friday.
Analysts believe the markets are expected to remain weak if the global situation does not improve and the expiry of February 2008 derivatives contracts on Thursday could also lead to heavy volatility as well.
"Markets are little nervous about the budget as it is expected to be common man-friendly and may not hold much for the stock market. Concerns are also there from the global market situation and the hike in fuel prices could lead the inflation to rise," Arun Kejriwal of Kejriwal Research and Investment services (KRIS) said.
Anil Dhirubhai Ambani Group firm Reliance Power Board on Sunday declared three bonus shares for every five held by its shareholders, a move which could help boost sentiments at the bourses on Monday.
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