Factors that will guide the markets this week

Investors will keep a track on global trends and trading activity of foreign investors with no major domestic trigger in sight this week, analysts said, and added that markets may face volatility amid the monthly derivatives expiry.

Stock markets had a record-breaking rally last week, largely driven by the US Federal Reserve's rate cut.

Historically, rate cuts in the US have had a positive impact on emerging markets, with India being a favoured bet among global investors, Santosh Meena, Head of Research, Swastika Investmart Ltd, said.

The highlight of the week was the aggressive buying by Foreign Institutional Investors (FIIs), who poured in over Rs 14,000 crore on Friday alone, he added.

"There are no major triggers expected this week, but upcoming macroeconomic data from the US will be crucial to monitor.

"FII flows will remain a key factor for the Indian equity market, alongside domestic institutional inflows, which will also play an important role.

"While markets currently seem unfazed by geopolitical risks, these factors could pose a significant threat to the ongoing bullish momentum.

"As we approach the September F&O expiry, heightened volatility is likely," Meena said.

Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd, said, "Markets are gradually climbing up and we expect this positive momentum to continue this week backed by strong FII inflow, healthy domestic macros, and receding concern about the US economy slowing down."

Movement of rupee against the US dollar and global oil benchmark Brent crude will also influence trading in the markets.

"Although the major event of the Fed's rate cut is behind us, attention will remain on the US markets for further direction.

"Additionally, trends in foreign fund flows and crude oil price movements will be critical factors for investors to monitor, as they may impact market direction in the coming weeks," Ajit Mishra – SVP, Research, Religare Broking Ltd, said.