Equities will track global trends, inflation data, foreign fund flows and movement of crude oil prices in this holiday-shortened week, according to analysts.
Investors will be keeping a watch on Wholesale Price Index (WPI) data, scheduled to be released on Tuesday, amid the retail inflation falling to 6.71 per cent in July and industrial production growing in June.
"With Q1 FY23 result season coming towards close, market focus will shift towards macro factors that include inflation, central bank rate action, oil prices and recession concerns in key economies globally," Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, said.
In an encouraging trend for the equity market, foreign investors have invested Rs 22,452 crore in the first two weeks of August.
This week, market attention will move to domestic and global macro variables like inflation trends and resultant impact in central bank policy decisions, Vinod Nair, Head of Research at Geojit Financial Services, said.
Apurva Sheth, Head of Market Perspectives at Samco Securities, said markets around the globe are expected to respond to the FOMC (Federal Open Market Committee) minutes publishing this week.
Stock markets are closed on Monday on account of Independence Day.
Also, the demise of ace investor 62-year-old Rakesh Jhunjhunwala on Sunday has come as a shock and analysts said that he was a cheerleader for the country's economy and markets.
Last week, the Sensex jumped 1,074 points or 1.83 per cent and the Nifty climbed 300 points or 1.95 per cent, registering their fourth straight week of gains.
Deepak Jasani, Head of Retail Research at HDFC Securities said that while Indian markets on the whole, when they open for trade on Tuesday, could be driven by the trends on Friday and Monday in the US markets, they will miss Jhunjhunwala’s unending faith and confidence in the India growth story. "The intervening holiday on Monday could dilute some impact of this sudden sad event".
According to Santosh Meena, Head of Research at Swastika Investmart Ltd, Jhunjhunwala's death is a big loss for the Indian equity market.
"Always a cheerleader of India, our economy and markets, Rakesh Jhunjhunwala was a true visionary. An unparalleled optimist and a man of discipline in investments, he always came out a winner be it bull market or bear market," C J George, MD & CEO of Geojit Financial Services, said.
About the likely market trends, Ajit Mishra, VP - Research at Religare Broking Ltd, said participants will first react to macroeconomic data, IIP (Index of Industrial Production) and CPI (Consumer Price Index), in early trade on Tuesday.
"Going ahead, with the earnings season behind us, the performance of global markets will be the focus for cues," he added.
Retail inflation softened to 6.71 per cent in July due to moderation in food prices but remained above the Reserve Bank's comfort level of 6 per cent for the seventh consecutive month.
India's industrial production grew in double digits for the second month in a row at 12.3 per cent in June, mainly due to strong performance by manufacturing, power and mining sectors, according to official data released on Friday.