Commencement of general election and the upcoming quarterly results season will be major factors that are expected to decide the trajectory of key equity indices next week.
According to market observers, the release of macro-economic data points on industrial production and retail inflation, combined with the direction of foreign fund flows and crude oil prices, will also impact investors' risk-taking appetite.
"In the next few weeks markets will await results of general elections before making a bigger move on frontline indices but mid and small-cap stocks could continue their up move," said Sahil Kapoor, Chief Market Strategist-Research, Edelweiss Wealth Management.
"RBI's interest rate cut and measures to boost liquidity should help mid and small-cap stocks in furthering the current rally."
Besides the polling for General Elections, Q4 earnings result season will kick off from next week. IT major Tata Consultancy Services (TCS) is expected to come out with its Q4 result on April 12.
Apart from the Q4 results, investors will look out for the upcoming macro-economic data points such as the IIP (Index of Industrial Production) and CPI (Consumer Price Index).
"Going ahead, investors focus will be on Q4 results season starting next week. IIP and CPI inflation are other key data points... Consensus expect IIP to decelerate while inflation to soften further," said Vinod Nair, Head of Research at Geojit Financial Services.
In terms of currency, the rupee on a weekly basis weakened to 69.22-23 per greenback.
"The rupee was volatile this week and swayed between 68.37 to 69.30 and closed at 69.22," said Sajal Gupta, Head Forex and Rates, Edelweiss Securities.
"Crude closed above $70 per barrel levels which can cause some more depreciation in the rupee... Expect rupee to trade between 69 to 70.20 levels."
On a weekly basis, provisional figures from the stock exchanges showed that foreign institutional investors bought scrip worth Rs 973.38 crore.
"In recent times, domestic market is outperforming global markets on account of improved liquidity from FIIs and DIIs due to dovish global central policies and expectation of political stability," Nair said.
"We expect this positive momentum to continue supported by higher inflows from FIIs and reduction in cost of equity, being the fastest and largest growing economy in the world. However, the global factors which can impact negatively on this expectation are; economy falls to a recession than a slowdown, delay in US-China deal, structural issue in EU and post effect of BREXIT."
As per technical charts, the underlying trend of the National Stock Exchange's (NSE) Nifty50 remains bullish.
"Technically with the Nifty continuing to rally higher and remaining in a firm uptrend, the index could attempt to target the current life highs of 11,680 points on a weekly closing basis," said Deepak Jasani, Head of Retail Research for HDFC Securities.
"It will be important that the Nifty holds above the immediate supports of 11,570-11,532 points for the uptrend to sustain."
Last week, the key Indian equity indices -- the S&P BSE Sensex and the NSE Nifty50 -- closed lower as investors turned cautious over the downward revision in GDP growth and prediction of below average monsoon.
Consequently, the Sensex closed 192.40 points lower at 38,684.72 points, while the Nifty50 finished at 11,598 points, lower by 45.95 points.
(Rohit Vaid can be contacted at firstname.lastname@example.org)
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