Also, we head into a week where equities have closed at their lowest levels this year. Adding to this is global markets finally caving in after a strong rally.
Finance Minister P Chidambaram holds the key. So far, there has been no pre-budget rally as the markets have very muted expectations.
However, any negative surprises could trigger a sharper-than-expected selloff.
The market will watch how the Finance Minister convinces investors on maintaining fiscal deficit at 4.8 per cent of the Gross Domestic Product (GDP), among other things like reducing spending, cutting subsidies and steps to revive industrial growth and investment. These factors can lift sentiment.
The 50-stock Nifty ended the week losing 0.63 per cent, while the Sensex ended down 0.78 per cent for the week.
Technically, the Nifty has tested its 100 DMA (day moving average) at 5,835, which would act as a support level. The index now faces resistance at 5,950.
Any breach on the downside can see Nifty lose another 100 points, while the upside seems capped at 5,950.
The high-beta Bank Nifty fared poorly and closed the week down 2.14 per cent. It now faces resistance at 12,430 and support at 11,885.
Globally, after a sharp two-month rally, the markets appeared 'frothy' and are awaiting some negative news flow to trigger a correction. This comes with reports that the US Federal Reserve may be considering cutting back on further bond buying. This triggered a sharp selloff in all asset classes with gold closing at seven-month lows and oil falling to 30-day lows.
Back home, the markets were actually correcting well before the global correction, which furthered the weakness.
The weak sentiment also saw a slowdown in foreign buying and weakening of the Indian currency.
Tracking the 'A' group stocks, the top three gainers of the week were McLeod Russel, which was up by 10.66 per cent, Berger Paints (10.56 per cent) and Gujarat Fluorochemicals (9.30 per cent).
The top-three losers of the week were Opto Circuits India, down by 13.65 per cent, AstraZeneca Pharma (10.28 per cent) and MMTC (10.03 per cent).