Expectations of an economic stimulus package, along with derivatives expiry and movement of foreign funds, are expected to drive equity investors' sentiment next week.
According to market observers, other major factors, such as the government's plans to recapitalise public sector banks and a volatile geo-political situation in the Korean Peninsula will also influence market movements.
"Markets' sentiment next week would be dominated by what the government offers as stimulus to the economy, especially how it balances the goals of pump-priming the economy yet keeping inflation and fiscal deficit under control," said Devendra Nevgi, Chief Executive, Zyfin Advisors.
"Global markets and the situation in North Korea will be closely watched."
Apart from global geo-political issues, derivatives expiry on September 28, Thursday, and likely outflows of foreign funds will be other major themes for the week ahead, experts opined.
"Markets are likely to remain volatile in the next week ahead of the expiry of September derivative contracts as traders roll over positions to the October 2017 series," D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, told IANS.
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"Nifty is expected to move in the range of 9,900-10,150 levels in the next week."
In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) continued with their selling spree and off-loaded stocks worth Rs 5,448.66 crore during the week ended September 22.
Figures from the National Securities Depository Ltd (NSDL) revealed that foreign portfolio investors (FPIs) divested equities worth Rs 3,911.21 crore during September 18-22.
However, domestic institutional investors (DII) bought scrips worth Rs 3,581.88 crore.
"Though DIIs flows are very strong, but any earnings hiccups in coming quarters may limit these inflows," said Vinod Nair, Head of Research, Geojit Financial Services.
"Going ahead, the markets will look for more cues from government on its stimulus programme and road map on fiscal deficit. Any sharp depreciation of INR will heighten the FIIs outflow."
On a weekly basis, the Indian rupee had weakened by 72 paise to close on last Friday at 64.80 to a US dollar from its previous week's close at 64.08.
In addition, investors will take further cues from macro-economic data points like the Index of ECI (eight core industries) for August 2017, external debt and the country's fiscal deficit which will be released next week.
As per technical analysis, on a downside, the Nifty is expected to further consolidate towards its next support level of 9,861 points.
"Traders will need to watch if the Nifty can now hold above support (level of 9,950 points) early next week; else a further correction is likely towards the next supports of 9,861 points," elaborated Deepak Jasani, Head of Retail Research for HDFC Securities.
"On an up-move, 10,000-10,040 points band can provide resistance."
Last week, subdued macro-economic sentiment, coupled with rising tensions in the Korean peninsula dragged the two key indices -- the BSE Sensex and the NSE Nifty -- below their psychologically important levels of 32,000-points and 10,000-points, respectively.
Consequently, the 30-scrip Sensitive Index (Sensex) of the BSE declined by 350.17 points or 1.09 per cent to 31,922.44 points.
Similarly, the Nifty 50 of the National Stock Exchange (NSE) edged lower to 9,964.40 points, down 150.6 points or 1.19 per cent.
(Rohit Vaid can be contacted at rohit.v@ians.in)
--IANS
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