New Delhi, May 4 -- Bulls are positioning for a 500-600 point rally in the benchmark Nifty50 index early this week, driven primarily by expectations of an eventual peace deal in West Asia and a sentimental boost from a potential Bharatiya Janata Party (BJP) victory in the West Bengal state elections.

"We are pencilling in an average $85/bbl for Brent this fiscal year on hopes of a peace deal in West Asia by mid-May," said Sanjeev Prasad, co-head, Kotak Institutional Equities (KIE). "That will contain the CAD at 2% (of GDP), which is the base or bad case. But, if oil averages $100 or more on a prolonged impasse or escalation, then we get an ugly scene with CAD at 2.6% , and a more adverse hit on macros."

Both the scenarios for current ac...