RBI's interest rate decision, quarterly earnings and global cues would be the major driving factors for equity markets this week, analysts said adding that the impact of the Union Budget could linger on this week.
Trading activity of foreign investors will also be a key driver for the markets, experts noted.
"US and India's manufacturing PMI for January to be released on Monday, will be the key macro data to watch out for.
"Investors will closely study the fine prints of the Budget policies and market focus will shift back to the corporate earnings/outlook and RBI's interest rate decision to be announced on Friday," Siddhartha Khemka, head - research, Wealth Management, Motilal Oswal Financial Services Ltd, said.
From the earnings calendar, Asian Paints, PC Jeweller, Tata Power, Titan, Apollo Tyres, Bharti Airtel, ITC,F, SBI, LIC, M&M and NHPC would announce their earnings this week.
Prashanth Tapse, senior VP (research), Mehta Equities Ltd, said, "Will the RBI soften its stance and announce any rate cut in this week's credit policy that would be interesting to watch out for?
"However, investors need to watch out for global developments, as any uptick in US bond yields and FII selling could dampen sentiment."
PMI data for the manufacturing and services would also be tracked by investors.
"As we look to this week, there are several important events on the horizon, including the MPC outcome, the Delhi state election, and developments regarding US tariffs.
"These events present an opportunity for market participants to remain engaged and informed, as they are likely to introduce some volatility," Osho Krishnan, Sr Analyst, Technical & Derivatives of - Angel One, said.
Krishnan further said, "Now, the major Union Budget is behind us, and it appeared as a non-event but practically speaking, FIIs participation was very minimal.
"Hence, the actual reaction is likely to be witnessed on Monday and hence, we need to wait for a day or two to understand whether the market has really discounted the Budget factor or not."
Finance Minister Nirmala Sitharaman on Saturday announced significant income tax cuts for the middle class and unveiled a blueprint for next-generation reforms for Viksit Bharat as she treaded a fine line between fiscal prudence and providing a thrust to growth.
The Budget for April 2025 to March 2026 fiscal (FY26) proposed to raise foreign investment limit in insurance sector to 100 per cent from current 74 per cent and continued spending spree on infrastructure while raising allocations for social sectors as well as providing for measures for poor, youth, farmers and women.
"The Union Budget largely played to our expectations, particularly with the much-needed income tax relief for the middle class, which will drive consumption and economic growth.
"No changes were made to Securities Transaction Tax or capital gains tax, as anticipated," Pranav Haridasan, MD and CEO, Axis Securities, said.
Equity markets were open on Saturday due to the presentation of the Union Budget.
Last week, the BSE benchmark jumped 1,315.5 points or 1.72 per cent, and the NSE Nifty went up by 389.95 points or 1.68 per cent.
Ajit Mishra – SVP, Research, Religare Broking Ltd, said, "The impact of the Union Budget could linger in the next session, particularly in the consumption sectors."
Additionally, with the earnings season set to take center stage again, traders should focus on stock selection, Mishra added.
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