Mumbai: Stock markets are expected to rally at the start of this week on expectations of a number of populist measures in the Union budget but sustaining the gains may be difficult and would depend on the global trends, said analysts.

“Bulls are pinning hope on the Union budget and there have been no euphoric movement in the past two weeks, it is expected that the market would rally if there is any surprise element in the budget,” Ashika Stock Brokers Research head Paras Bothra said.

Finance minister Pranab Mukherjee will present the Union budget 2009-10 in Parliament on Monday.

“Investors are hopeful that the government would present a budget that will ensure a buoyant capital market so that the PSU stake disinvestment reaps them good returns. Even if everything is neutral, the market would trade with a positive bias,” Unicon Financial chief executive G Nagpal said.

The BSE benchmark Sensex gained over 148 points during the past week to end at 14,913.05, while Nifty of the National Stock Exchange settled at 4,424.25.

Marketmen, however, feel that sustaining the positive momentum would be difficult as the global markets are trading in the negative zone.

“There would be some rally on the budget day after the speech from the finance minister, but after a day or two they would start tracking global cues, which are mostly in the negative,” Bothra said.

The finance minister has already indicated the government would continue to focus on public spending in sectors that generate high employment.

“Anything positive in the budget would give a boost to the market. The stock prices did not move much in the past few trading sessions as investors were waiting for the budget to take positions in the market,” Bothra noted.

After a sweeping victory in the general elections, the UPA government is now aiming at presenting a “populist” budget and reform the tax structure.

The industry and brokerages have asked the government to do away with the securities transaction tax and fringe benefit tax, and are also suggested an increase in excise duty in sectors where demand has improved.

Besides, the market is also looking at government stake dilution in public sector entities, deregulating auto fuel prices and auctioning of the 3G spectrum that would help in increasing the government exchequer.

“We expect the budget to be temporarily positive for equity, bond and currency markets. The government will deliver something for all, without a serious attempt to control rising costs. It is likely to push up social spending, increase subsidies and provide for infrastructure investment,” Kotak Institutional Equities said in a report.

The US markets closed in the red last week with the Dow Jones Industrial Average dipping 2.63% to 8,280.74 points and S&P 500 by 2.91%.