Besides, factors like skirmishes at the border, signs, if any, of an economic revival, of rupee-dollar parity and the moves by Federal Resreve could have a bearing on the market. Any interest rate hike by the Fed could give short-term jitters to markets across the globe while giving an opportunity to fund managers to buy at attractive valuations. At the same time, the flow of investments from the US could increase as more funds look for buying opportunities outside America. With elections approaching, the market may also discount the possibilty of an unstable coalition comingto power as permutaions and combinations unfold. This could bring a one-time correction in prices in the medium term.

With no bad news emanating from Kargil during the week-end, the fund managers are once again turning to fundamentals and picking up stocks at attrcative valuations. However, the downside is difficult to gauge in case situation worsens at the border.

``This week will decide which way is the market moving and we have adopted a wait and watch policy. If the bullish mood persists till this week with no bad news from Kashmir, the markets are likely to tocuh the 4200-4300 level from current levels. From here, the markets may also test the 4500-level. If FIIs are convinced about the situation in Kashmir, they will also pick up stocks,'' said a fund manager. Adds Ajay Srinivasan, managing director, Prudential-ICICI, ``I believe that there is scope for further rise and there is a lot of buying left. Although today's rally was largely operator driven, the undercurrent is very bullish. With no newcapacity addition coming up in the cement sector and volumes picking up, the sector looks promising.''

For fund managers scouting for cheap valuations, cash is king. Besides Rs 800 crore from UTI's recently concluded monthly income plan, DSP Merrill Lynch's balanced fund is likely to pump in another Rs 52-55 crore in the equity markets.

``The market is finding reasons to rise. Today's rally was largely driven by domestic funds since both New York and London were closed today. We will be buying regularly on a 10 per cent basis into the market with uncertainty at Kargil and on the political front. On the other hand, FIIs are looking for value stocks and hence are buying into cyclical stocks. This will also contribute to the market's rise. However, their short-term view will be determined by the manner in which the rupee behaves,'' said Kavita Hurry, head, private banking at ING AMC.

Shyam Bhat at Tata AMC sees the market range-bound between 3600-4100 levels. ``While Kargil is an immediate trigger for thedownside, if UTI turns a big buyer in July after its payout obligations, we may see the market touch the 4300 level. Currently, cement and steel sectors look attractive.''

However, Simon Holdsworth at ITC-Threadneedle strikes a discordant note. ``The market will settle down relatively over the next few months. However, in a month or two, some of the economically sensitive companies will see their share prices come under pressure as their earning estimates are downgraded with economy failing to revive. I believe that markets will be unusually volatile with a general bias towards the lower end in the next 3-4 months. However, consumer companies will be the winners in this environment.''

Some of the fund managers have again turned bullish on IT stocks with their first quarter results just a month away. ``IT stocks are good buy at current valuations,'' says Srinivasan. ``The IT stocks have failed to participate in the current rally and they look pretty good. We are optimistic,'' says another fundmanager.

However, Bhat at Tata AMC has a word of caution. ``The growth of IT sector should slow down and we may witness a very short-term rally. However, some of the second-rung stocks are good buys from the long-term perspective.'' Holdsworth at ITC-Threadneedle is bearish on the sector. ``We believe that the growth story for most of the infotech companies is over and they may see a significant slowdown in business in the last two quarters of the current year,'' he adds.