Mumbai: The progress of monsoon rains, combined with the upcoming key quarterly results, and the release of macro-economic data points are expected to influence investors` sentiments in the coming week.
According to market observers, other factors such as international central banks` meet, US jobs data which was released last Friday and the likely profit booking at higher levels might flare up volatility in the benchmark indices.
"Strong US jobs data released on Friday should set the tone of next week`s opening," Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services, told IANS.
The US Bureau of Labor Statistics reported that the total non-farm payroll employment increased by 287,000 in June, whereas the unemployment rate rose to 4.9 percent.
The healthy data assumes significance as it can quicken the start of the next rate-hike cycle. A hike in the US interest rates can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India.
Further, James cautioned against future choppy sessions on the back of renewed uncertainties over Britain`s decision to exit from the EU (Brexit).
"The ECB (European Central Bank) and BoE (Bank of England) meetings shall ensure that concerns surrounding Brexit`s repercussions again resurface," James added.
D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, told IANS that investors` sentiments will be influenced by domestic cues such as the ongoing reforms and the start of the quarterly results season.
"It is expected that domestic market would move higher as market participants are confident about the government`s reforms and policies," Aggarwal elaborated.
"With the first quarter earnings to kick start from next week, the market is hopeful of some kind of recovery in the quarterly earnings."
IT major Infosys is expected to be the first bluechip firm to come out with its results on July 15. IndusInd Bank is expected to announce its quarterly numbers on Monday.
Apart from quarterly results, key macro-economic data numbers such as the factory output -- Index of Industrial Production (IIP) -- for May and inflation figures for June, will give future guidance about the next move of the Reserve Bank of India on lending rates.
"Investors will closely follow the important cues for next week like the release of CPI (Consumer Price Index), industrial production and inflation data," said Dhruv Desai, Director and Chief Operating Officer of Tradebulls.
"Indian equity markets are likely to face some volatility due to profit booking at higher levels in the coming sessions."
Besides, investors will keenly follow the progress of monsoon rains. In its latest update, the IMD (India Meteorological Department) reported that monsoon rainfall was above the long period average (LPA) by 35 percent from June 30-July 6 over the country as a whole.
"The IMD has forecast rains to be above normal in July and August, which is good news for the markets going ahead," Vaibhav Agarwal, Vice President and Research Head at Angel Broking, told IANS.
Last week, the equity markets fell prey to the bears, as profit booking, negative global cues and a weak rupee arrested their meteoric rise.
The 30-scrip sensitive index (Sensex) of the BSE closed the week`s trade with a loss of 18.01 points or 0.06 percent at 27,126.90 points.
Similarly, the 51-scrip Nifty of the National Stock Exchange (NSE) dropped to 8,323.20 points -- down 5.15 points or 0.06 percent.