Stock markets would be largely driven by macroeconomic data, auto sales numbers, FII inflows and global trends this week, analysts said.
The US debt ceiling negotiations and institutional flows will also be watched by investors.
"This week, market participants will closely monitor institutional flows, as there is a historical observation that when both FIIs and DIIs become net buyers simultaneously, there is a likelihood of some profit-booking in the market," said Santosh Meena, Head of Research, Swastika Investmart Ltd.
On the global front, the US debt ceiling issue holds significant importance, alongside US macroeconomic indicators, movement of the US bond yields, the dollar index and crude oil prices, Meena added.
President Joe Biden said a deal to resolve the government's debt ceiling crisis seemed “very close” late Friday, even as the deadline for a potentially catastrophic default was pushed back to June 5.
"Domestically, attention will be directed towards key macroeconomic data, including GDP figures and monthly auto sales numbers," he said.
"This week marks the beginning of the new month also so participants will be eyeing high-frequency data viz. auto sales, manufacturing PMI and services PMI data. Before that, GDP data scheduled on May 31, will also be on their radar," said Ajit Mishra, VP Research, Religare Broking.
PMI data for the manufacturing sector is scheduled to come on Thursday.
Apart from these factors, the performance of the US markets amid the ongoing debt ceiling talks will be in focus, he added.
Last week, the BSE benchmark jumped 772.01 points or 1.25 per cent.
Stock markets ended a two-week-long consolidation phase and gained over one-and-a-half per cent.
"After a firm start, the benchmark remained range bound in the middle, tracking mixed global cues however strong recovery in the final sessions changed the tone. Consequently, Nifty managed to surpass the hurdle at 18,400 and settled around the week’s high at 18,499.30 levels," Mishra said.
All sectors contributed to the move wherein metal, pharma and IT were the top gainers. The buoyancy continued on the broader front, with the midcap index scaling to a new high.
"Nifty looks set for a new high after the consolidation breakout, thanks to improved participation from across sectors. However, stability on the global front would be critical else the momentum could derail," Mishra added.
"As we are entering into the last leg of the earnings season, we have companies like Adani Ports, IRCTC and PFC, who will be announcing their numbers during the week, Mishra said.
Last week, the performance of the domestic market was influenced by global cues, including concerns surrounding the ongoing US debt ceiling negotiations, German recession and hawkish comments from the US Fed officials, said Vinod Nair, Head of Research at Geojit Financial Services.