In the absence of any major trigger, domestic markets are also expected to take cues from international developments such as hints on the timing of US stimulus tapering, they said, adding that foreign fund flows would also be closely watched.
"Global cues, political and economic news within the country shall be deciding market trend in near-term. This week 5,970 shall be crucial deciding level for Nifty in near-term and the index is likely to witness further selling below this level," said Nidhi Saraswat, senior research analyst, Bonanza Portfolio Ltd.
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The overall GDP growth in India is expected to have risen by around 4.5% during the second quarter of this financial year. This is marginally higher higher than the 4.4% economic growth registered in April-June quarter.
Renewed uncertainty about the US Federal Reserve tapering its stimulus programme and the absence of buying by foreign institutional investors had weighed on the market last week. The 30-share Sensex closed at 20,217.39 on Friday while Nifty ended at 5,995.45.
"International markets have been flat in the last one week after moving up on Yellen's statement of delay in tapering. Indian markets had also moved up sharply a week ago hence, they have given a mild correction," said Rajesh Iyer, Head, Investments and Family Office, Kotak Wealth Management.
He further added that equity markets will react to international news flow and results of upcoming state polls.
"Earnings downgrade cycles seems to be bottoming out and sentiment is turning positive but macros are still supporting. Except for Current Account Deficit, all other macro parameters are still challenging and would take time to recover," Iyer said.
Elections will be held in Madhya Pradesh on Monday.
Registering its third weekly loss, the Sensex, fell 0.9% over the last week.
Analysts have also raised concerns over low retail participation and hoped they return soon.
"Retail participation will return after 2014 elections if a decisive government is elected at the Centre. People are tired of weak execution of policies, and once that is addressed by a decisive government, stock market will witness return of domestic investors," said Raamdeo Agrawal, Joint MD, Motilal Oswal Financial Services.