The upcoming quarterly results season, along with key macro-economic data points, are expected to determine the trajectory of equity indices next week.
Market observers opined that global cues, combined with the direction of foreign funds, will also impact investors' risk-taking appetite.
"Markets would look to the upcoming earnings season, though the expectations remain muted on weaker growth on the back of GST implementation. The divergence of weak Indian macros and buoyant global growth, combined with higher Indian market valuations, will keep the positive momentum in Indian markets capped," Zyfin Advisors' Chief Executive Devendra Nevgi told IANS.
"Fiscal overruns and inflation stickiness and the lack of other adequate levers to pump growth will result in markets relying on domestic liquidity for help," Nevgi added.
IT major Tata Consultancy Services (TCS) is expected to be the first blue chip to come out with its second quarter (Q2) results on October 12.
"Domestic market is concerned with the lack of earnings growth -- led by GST disruption and reduction in liquidity by global central banks... However, in the near term, Q2 earnings will be the key factor which will determine the direction of the market," elaborated Vinod Nair, Head of Research at Geojit Financial Services.
Apart from the Q2 results, investors will also look out for the upcoming macro-economic data points such as the IIP (Index of Industrial Production) figures.
The Central Statistics Office (CSO) is slated to release the macro-economic data points of IIP and CPI (Consumer Price Index) on October 12, Thursday.
Besides the macro-economic data points, rupee's movement against the US dollar and an outflow of foreign funds could make investors nervous.
The Indian rupee weakened by nine paise on last Friday to close at 65.38 to a US dollar from its previous week's close at 65.29.
In addition to Indian currency, provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) off-loaded stocks worth Rs 3,022.07 crore.
Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) divested equities worth Rs 550.75 crore during October 3-6.
"FPIs have sold over $2 billion in Indian equities over the past couple of months as they grow cautious due to economic growth slowing down and expensive stock prices. A constant outflow of foreign investment from domestic equity markets have weighed on rupee," Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, told IANS.
"As a result, we can see USD-INR rise towards 66/66.20 levels in the coming days from 65.35 now. However, we do not expect USD-INR to sustain above 66.20 levels for long, as RBI is expected to remain a seller at higher levels to contain volatility."
On technical charts, Nifty can move towards record highs after crossing the 9,980-10,000 points hurdle.
"Nifty's sharp bounce back on Friday has opened up possibility of a further up-move in the early part of next week," said Deepak Jasani, Head of Retail Research for HDFC Securities.
"A decisive move above the hurdle of 9,980-10,000 points level could lead Nifty to move towards the recent all-time high of around 10,178 points level in the next 1-2 weeks. On down moves, it could take support at 9,830 points."
Last week, the key Indian equity indices -- the BSE Sensex and the NSE Nifty -- rose on the back of global cues, along with healthy macro and auto sales data.
Consequently, the 30-scrip Sensitive Index (Sensex) of the BSE surged by 530.5 points, or 1.7 per cent to 31,814.22 points.
Similarly, the Nifty50 of the National Stock Exchange (NSE) edged higher by 191.1 points, or 1.95 per cent to close the week's trade at 9,979.70 points.
(Rohit Vaid can be contacted at email@example.com)