Upcoming quarterly results and Parliament's monsoon session, as also the direction of foreign funds flow will set the course for the equity indices in the coming week, market observers opine.
With markets already at dizzying heights, potential triggers like news on monsoon's progress and global trends like monetary policy review by major international central banks could unleash "volatility", analysts feared.
"The markets will focus on earnings this week though the expectations remain muted for the last quarter. Markets are trying to analyse the earnings impact due to GST disruption," Devendra Nevgi, Chief Executive of Zyfin Advisors, told IANS.
"The worry on rising PE (price-earning) ratio of benchmark indices ... is being overwhelmed by larger domestic fund flows and a buoyant global economy."
Companies like Reliance Industries, Ultratech Cement, ACC, Wipro, Bajaj Auto, Kotak Mahindra Bank, Jubilant FoodWorks and Ashok Leyland are expected to announce their quarterly results in the coming trade week.
"In the near term, corporate margin and profitability is expected to be under pressure due to GST roll-out," said Vinod Nair, Head of Research, Geojit Financial Services.
"The Q1FY18 earnings may not match the current premium valuation due to a tepid start of result season. Investors are giving more weight to the prevailing positive macros which will help to maintain a positive vibe in the market."
Apart from quarterly results, market participants are expected to track several events like the commencement of Parliament's monsoon session on Monday, July 17, respective meetings of ECB (European Central Bank), BoJ (Bank of Japan) and China's Q2 GDP figures.
According to D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, progress of monsoon rains and rupee's movement against the US dollar will dictate the near-term trend of the equity markets.
Figures from last week showed that the Indian rupee strengthened by 14 paise to close at 64.45 against the US dollar from its last week's close.
"We could see USD/INR testing 64:00 levels over the next week on spot. We had turned bullish on INR against USD way back in early February and continue to see structural uptrend continue," said Anindya Banerjee, AVP, currency derivatives at Kotak Securities.
Investment-wise, previous week's provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) purchased stocks worth Rs 1,259.98 crore, while domestic institutional investors (DIIs) bought scrip worth Rs 2,361.61 crore during July 10-14.
The National Securities Depository's (NSDL) figures revealed that foreign portfolio investors (FPIs) invested in a total of equities worth Rs 366.44 crore, or $57.01 million, during the week ended July 14.
On technical levels, the NSE Nifty is expected to touch new highs after crossing the immediate resistance level of 9,915 points.
"Technically, the underlying trend remains firmly up and the coming week could see the Nifty attempting to move to new life highs," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.
"Immediate resistances are at 9,915 points while crucial supports to watch for any weakness are at 9,845 points."
Last week, key equity indices gained over 2.00 per cent on hopes of a rate cut by the Reserve Bank of India (RBI), fresh inflows of foreign funds and the onset of the quarterly earnings season.
Consequently, the 30-scrip Sensitive Index (Sensex) of the BSE closed at 32,020.75 points -- up 660.12 points or 2.10 per cent from its previous week's close.
Similarly, the NSE Nifty rose by 220.55 points or 2.28 per cent to close the week's trade at 9,886.35 points.
(Rohit Vaid can be contacted at firstname.lastname@example.org)