Markets are likely to be volatile and may witness bouts of profit-booking this week ahead of the GDP data and the expiry of August's futures and options contracts amid political strife that has stalled economic reforms.
This fiscal's first quarter GDP data is due on Friday.
Market experts said that there may be selling pressure for most of the trading sessions amid worries that pace of economic reforms could be stalled with the Opposition BJP-led NDA sticking to its demand for Prime Minister Manmohan Singh's resignation on the coal block allocation issue.
"Markets in India as well as globally are betting on increased hopes of stimulus aid or interest cuts by the top authorities, which will help euro-zone problems.
"Within the country, quicker reform measures are expected from the government in the current Parliament session," Bonanza Portfolio Research Analyst Nidhi Sarswat said.
Brokers said the domestic sentiment has turned bearish as the Reserve Bank in its FY12 annual report has stated that inflation remains the cornerstone of monetary policy action.
On the domestic front, while monsoon deficit has reduced, other concerns have emerged. Brent crude is trading at about $114 a barrel mark. Food inflation remains high and retail fuel prices remain suppressed, analysts said.
"Fiscal reforms are awaited by the markets and hopes are high after the new Finance Minister has come in. However, markets are yet to see any concrete initiatives being taken up, though efforts are being made to arrive at a consensus," Dipen Shah, Head of PCG Research at Kotak Securities, said.
"We continue to believe, though with lower conviction, that some of these initiatives will be taken up by the government, which will likely address the concerns about fiscal deficit, administrative and procedural delays. These are a pre-requisite for the markets to go up sustainable," he said.
Experts said that high consumer price index inflation number has watered down expectations about immediate interest rate cuts.
CNI Research Chairman and Managing Director Kishore Ostwal said, "The markets will remain highly volatile due to derivatives expiry on Thursday".
