With budget ahead, markets are expected to be volatile. Every statement that comes from south block would have effect of either dampening the markets or lifting it to new highs. Especially, this year, when expectations from budget are quite high, budget has to be exceptionally market friendly to keep markets spirits high.

It will be both naïve and wrong to link markets only with the budget, ignoring the industry growth scenario. Considering the industry wise performance and investors fancy for particular segment, infrastructure is expected to see good upswing and pharmaceutical sector may not rally this month.

Most analysts feel that market having pulled back to 18,800 levels from low of 17500, worst is behind. With refunds of Reliance Power, markets are expected to be liquid.

But for how long? Are you a long term investor or day trader?

Already 3 mega issues (Emmar, Reliance fresh and infratel) are lined up which seek to take out another 30000 crore from market, say about 3 times the amount of reliance power issue. If reliance power did this to markets, what would issues 3 times the size do? Many analysts would link this fall to global factors, but I personally, wont link entirely to global factors. If global factors were the only reason, how do you explain the fall after RPL mega issue?

These lined up issues have potential to deliver a big jolt to the market. The scenario of market recovering all its lost ground and forms a new high is too optimistic; at least what appears as on today.

Retail investor is yet to mature. Indian FI can not neutralize impact of money withdrawal by FIIs in any significant way.        

Outlook for the Indian market in the medium to long-term continues to look very good; and from present levels, I would expect 15-20% growth in this year, however global concerns still remain a major threat.

Nervousness ahead of the Budget remains other threat in the short term. Budget would come towards the last Thursday of the month; which also happens to be the settlement day. So we will probably witness lot of volatility during that particular week.

Another noticeable feature in today’s trading scenario is sharp dip in trading volumes and investor confidence is yet to return. Today any investor is extra keen to believe any bad news.

So; stay out of markets, at least for time being; and keep cash ready for the forth coming IPOs. As for entering secondary markets, I think waiting appears the best bet, unless Sensex registers another fall of 1500 points and offers some decent picks.