The market is likely to remain volatile this week, and in the absence of

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domestic triggers, global cues and behaviour of foreign institutional investors (FIIs) are likely to drive sentiment on Dalal Street.

“The Union budget will be the major trigger for the market this month. Before that, we feel investors will look at FII behaviour. Last year, the FIIs had infused huge money in the equity market around this time on expectations of budget announcements. This time, they may again hold the key,” said Waqar Naqvi, CEO of Taurus Mutual Fund.

Market experts said the 75 basis points hike in the proportion of money that banks need to keep with the central bank was in line with expectations, and there may be no further downside for the interest rate-sensitive sectors.

“The market will remain volatile in the short run till the Union budget is unveiled. The interest-sensitive stocks were under pressure in the past couple of sessions, which confirms that the market had reacted to the event much before it occurred,” said Raamdeo Agrawal, co-founder and director of Motilal Oswal Financial Services.

Agrawal felt investors would follow the upcoming budget keenly as the government is likely to unwind its stimulus packages for certain sectors, including the automobiles industry. According to him, investors may find good opportunities to buy stocks at reasonable prices if the fear of a budget impact leads to a 5-10 per cent correction in the market.

In the futures segment, rollovers to the February series were high at 76.53 per cent in the wake of a correction in the market and creation of huge short positions by foreign institutional investors.

“The market may turn more volatile in February than it was in the first three weeks of January. This builds a case for short covering at lower levels, which may provide support in absence of any significant case base for buying,” Angel Broking said in a note on the rollovers.

Foreign institutional investors (FIIs) remained net sellers on Friday, pulling out Rs 467.24 crore from the market, according to figures available at the market regulator Sebi’s website.

The BSE Sensex plunged 501.72 points, or 2.98 per cent, last week to close at 16,357.96. The Nifty index on the NSE fell 153.95 points, or 3.06 per cent, to end at 4882.05.

“The market is heavily oversold and weak. On Monday, we may see highly volatility. The Nifty has resistance at 4,920 while support exists at 4,805 and 4,764,” said Alex K Mathews, head of research at Geojit BNP Paribas.

The put-call ratios of Sun Pharma, Grasim, SBI and Sterlite in terms of open interest for the near-month expiry stood at 4, 2.75, 1.21 and 1.16, respectively, reflecting bearish sentiment on these counters.