Will markets face volatility this week?

Stock markets are likely to remain range-bound in this holiday-shortened week amid a lack of any major domestic triggers, analysts said.

Stock indices may also face volatility during the week amid the monthly derivatives expiry on Thursday.

Equity markets would remain closed on Monday for Christmas.

"This week, as global cues remain sparse due to the Christmas holiday, domestic market dynamics are expected to steer sector and stock-specific movements," Santosh Meena, head of research at Swastika Investmart Ltd, said.

With limited cues, the December F&O expiry could inject volatility into the markets, Meena added.

Last week, the BSE benchmark declined 376.79 points or 0.52 per cent and the Nifty dipped 107.25 points or 0.49 per cent.

The decline in the markets came after a record-breaking rally where both the benchmark equity indices Sensex and Nifty hit their all-time high levels on December 20.

"While India's equity market valuation is expensive, they may remain elevated due to the increased likelihood of a stable government at the centre.

"Additionally, with FPI holdings at a 10-year low and potential foreign buying in the debt market ahead of India's inclusion in the JP Morgan Emerging Market Government Bond Index, may provide some stability to the INR," Jitendra Gohil, chief investment strategist, Kotak Alternate Asset Managers Limited said.

Analysts said markets were on a record-setting spree for a while and have been in an overbought zone, so hiccups were expected in the form of profit-taking and hence concluded the week with declines following seven consecutive weeks of gains.

"As we enter into the holiday mood, we expect markets to remain range-bound with stock-specific action this week," Siddhartha Khemka, head - retail research at Motilal Oswal Financial Services Ltd, said.

Markets would also focus on global oil benchmark Brent crude and the rupee-dollar trend.