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Market observers pointed out that the ongoing quarterly results season and crude oil price fluctuations, combined with the direction of foreign fund flows and the rupee's movement against the US dollar, will also impact investors' risk-taking appetite.
"The markets next week will focus on earnings, macro-data and, of course, global cues," Devendra Nevgi, Founder and Principal Partner, Delta Global Partners, told IANS.
"The global markets remain volatile, which might spill over to Indian markets. FPIs (Foreign Portfolio Investors) have been net sellers, hence support from DIIs (Domestic Institutional Investors) remains important in event of global volatility."
In the past few weeks, a massive sell-off in the global markets has pulled the Indian equity indices deep into the red. Since February 1, 2018, the Bombay Stock Exchange (BSE) Sensex has shed around 1,900 points and the National Stock Exchange (NSE) Nifty50 over 500 points.
According to securities market regulator Sebi's Chairman Ajay Tyagi, Indian stock market volatility "may continue" for some more time due to global factors.
However, he assured that "there is no cause of worry" in terms of volatility, as the country has a robust risk-management system and that "there is no issue in terms safety of contracts or enforcement of contracts".
Answering a query on Economic Survey's recommendation for the need to be vigilant of stock market movements, Tyagi said: "There is no cause of worry in terms of volatility."
"Volatility, perhaps, may continue for some time, because, as you see in the US, the unemployment rates have really come down, wage rates have really gone up, so, maybe it is more than what was expected," he said at a press briefing in New Delhi on Saturday.
The Economic Survey 2017-18, tabled in Parliament on January 29, had called for a vigil against a likely stock market bubble and that "sustaining" the current high valuations require "future earnings" to meet high expectations.
Apart from global cues, the ongoing quarterly results season assumes significance as major firms like GAIL, Indian Hotels, DLF, Fortis Healthcare, GMR Infra, Welspun India, Idea Cellular, Jet Airways, Nestle India and Sun Pharma are expected to announce their quarterly results in the coming week.
"The current earnings season is providing strong signs of revival in corporate earnings, underlining the long-term growth prospects," said Vinod Nair, Head of Research, Geojit Financial Services.
"However, the prevailing inflationary pressure and fiscal slippage may turn RBI to take a more hawkish stance in the near future.
Considering this, the near-term profitability of domestic corporate might get impacted by higher inflation and interest cost."
Besides the Q3 results, investors will keep a close watch on the upcoming macro-economic data points such as the Index of Industrial Production (IIP), Consumer Price Index (CPI), Wholesale Price Index (WPI) and Balance of Trade figures.
The Central Statistics Office (CSO) is slated to release the macro-economic data points of IIP and CPI on February 12.
"In the week ahead, December IIP, January CPI and WPI inflation data are key triggers for the market," Nair said.
"The CPI inflation is expected to reduce marginally to 5.1 per cent from 5.2 per cent, while IIP to decelerate to 6.1 per cent versus 8.4 per cent."
On technical levels, the underlying short-term trend of the NSE's Nifty50 remains bearish.
"Technically, with the Nifty continuing to correct this week after breaking a trend line support in the previous week, the underlying short-term trend remains down," said Deepak Jasani, Head of Retail Research for HDFC Securities.
"Further downsides are likely once the immediate supports of 10,276 points are broken. Any pull-back rallies could find resistance at 10,703 points."
Consequently, the barometer 30-scrip Sensitive Index (Sensex) tanked by 1,060.99 points or 3.02 per cent to close at 34,005.76 points.
Similarly, the wider Nifty50 of the National Stock Exchange (NSE) closed the week's trade at 10,454.95 points -- shedding 305.65 points or 2.84 per cent from its previous week's close.
(Rohit Vaid can be contacted at firstname.lastname@example.org)