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With no major domestic market-moving event scheduled this week, stock market investors would largely focus on global trends and foreign fund movement, and may face volatility amid monthly derivatives expiry, analysts said.
"We expect volatility to remain high due to the scheduled expiry of February month derivatives contracts. Besides, participants should keep a close watch on the performance of the global indices, especially the US for cues," Ajit Mishra, SVP - Technical Research at Religare Broking Ltd, said.
Last week, BSE Sensex rose 716.16 points or 1 per cent to close at 73,142.8 points and inched closer to its record high level of 73,427.5.
"Markets remained volatile in the passing week but managed to end with a gain of nearly a per cent. After the initial rise, mixed global cues combined with profit taking in select heavyweights capped the momentum.
"Consequently, the benchmark indices, Nifty and Sensex, continued to oscillate in a narrow range till the end and finally settled at 22,212.70 and 73,142.80 respectively," Mishra said.
After the marginal dip, the US benchmark index, the Dow Jones Industrial Average (DJIA) has resumed the uptrend and also crossed a new milestone of 39,000. With a strong base of around 38,400, we expect the prevailing tone to continue in the index and that could also help our markets to maintain the positive bias, Mishra added.
Investors are also expected to take guidance from the minutes of the February Monetary Policy Committee (MPC) meeting released by the central bank last week. The rate-setting panel has hinted a cautious approach towards monetary easing amid uncertainties around inflation outlook.
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"On the economy front, almost all MPC members continued to express a cautious approach to monetary easing, given the uncertainties surrounding the inflation outlook," Shrikant Chouhan, Head Equity Research at Kotak Securities, said.
In the latest bi-monthly policy review held earlier this month, the Reserve Bank of India's six-member panel decided to leave the key policy rate unchanged at 6.5 per cent for the sixth time in a row.
Analysts pointed out that factors like crude oil prices, rupee movement, quarterly GDP data to be released in India as well as in the US, and monthly global manufacturing PMI data in the coming week will also influence the market sentiment.
With Q3 FY24 results season behind us, the market focus will be on the macro developments both domestic and international, Chouhan said.
Besides, six IPOs worth more than Rs 3,300 crore will be hitting the stock markets next week, including Platinum Industries and Exicom Tele-Systems public issues which will open for subscription on February 27 and IPO of Bharat Highways Infrastructure Investment Trust on February 28.
