Derivatives expiry, combined with fourth quarter results and position of foreign investors vis - a - vis India, will guide the domestic equity markets during the week ahead.
According to Nitasha Shankar, senior vice president for research with YES Securities, key Indian equity markets could witness further weakness amidst volatility owing to F&O (futures and options) expiry week.
Besides, trends in global crude oil prices, movement of the Indian rupee and further announcements on the monsoon will influence investors' sentiments.
"On the domestic front, a key event to be watched is the results of some of the large companies in the capital goods sector, " Vinod Nair, head of research with Geojit BNP Paribas, told IANS.
"The expectation is negative, which is likely to put additional pressure on the markets. "
Major firms like ONGC, IOC, HPCL, Power Finance Corporation, Bajaj Auto, Ashok Leyland, Tata Steel, GAIL, India Cements, BHEL, Crompton Greaves, Cipla, Abbott India, GSK Pharma are expected to announce their Q4 results in the coming week.
"Investors will closely track the next batch of Q4 results as Tata Power and Bharat Petroleum will be announcing their Q4 results on Monday, followed by Tech Mahindra and Colgate India on Tuesday, " said Vaibhav Agarwal, vice president and research head at Angel Broking.
In addition, fears of another large outflow of foreign funds on the renewed fears of a US rate hike will keep investors' jittery.
"Global markets suffered sharp plunge last week, with the major averages falling to their lowest levels in about two months on renewed concerns about the outlook for interest rates, " Dhruv Desai, director and chief operating officer of Tradebulls, told IANS.
"The voice from the Fed chairperson on rate hike could be possible in June or July, if economic data improves as expected. "
Investors were spooked last week as the US Federal Open Market Committee's (FOMC) April minutes disclosed that the US central bank might raise key lending rates in June.
This led to a massive outflow of foreign funds from the domestic equity markets.
Data with exchanges revealed that foreign institutional investors (FIIs) sold Rs. 2, 063. 95 crore worth of stocks during last week.
Figures from the National Securities Depository Limited (NSDL) showed that the FPIs (Foreign Portfolio Investors) divested Rs. 2, 117. 79 crore or $316. 92 million in the equity markets from May 16 - 20.
However, announcements on the monsoon's further progress can lead the domestic indices away from rainy days.
"Going forward, over the next 4 - 6 weeks, the monsoon would be very important for the markets, " elaborated Pankaj Sharma, head of equities for Equirus Securities.
"How it advances across the country and how the spatial distribution of rains is can really be a make - or - break factor for the Indian economy and stock markets. "
The equity markets closed the previous week on a negative note, as a massive outflow of foreign funds on the back of negative global and local cues dragged them lower.
The wider 51 - scrip Nifty of the National Stock Exchange (NSE) declined by 65. 2 points or 0. 83 percent to 7, 749. 70 points.
Similarly, the barometer 30 - scrip sensitive index (Sensex) of the BSE receded by 187. 67 points or 0. 73 percent to 25, 301. 90 points.