Easing India-Pakistan tensions, combined with the direction of foreign fund flows and the rupee's movement against the dollar, will steer the equity market's trajectory in the coming week.
According to market observers, lower-than-expected gross domestic product (GDP) figures, crude oil price fluctuations and a likely decline in India's weightage in the MSCI Emerging Market Index might impact investors' sentiments.
"Going forward, the market will continue to track global markets along with military operations on the Indo-Pak border," Devendra Nevgi, Founder and Principal Partner, Delta Global Partners, told IANS.
According to Vinod Nair, Head of Research, Geojit Financial Services, the market is likely to trade with a positive bias on account of ease in border tensions and expectation of the US-China trade agreement.
"In terms of valuation, if we look at the Nifty500, about 60-65 per cent of stocks are currently below or in-line with 7-year average valuations on the trailing price/earnings ratio (P/E) basis, which is very attractive," said Mr Nair.
"Investors will continue to look at high quality mid- and small-caps. Whereas rate sensitive stocks are likely to be in limelight on expectation of a rate cut given slowdown in the Q3 GDP growth."
Besides, the rupee movement along with crude oil prices movement will be keenly tracked.
On the currency front, the rupee weakened by 17 paise to close at 70.91 against the dollar for the week ended March 1.
"Rupee closed 70.91 after a volatile week. Next week is expected to be range-bound as markets have come to peace with Indo-Pak situation. No major escalation looks likely but nervousness would prevail," said Sajal Gupta, head of forex and rates at Edelweiss Securities.
"Lower GDP numbers, reduction of India weight in the MSCI Asia Index would be a dampener. Expected range can be 70.40 to 71.20."
On technical levels, the underlying short-term trend of the NSE Nifty 50 remains bullish.
"Technically, with the Nifty remaining in a short-term uptrend, traders will need to watch if the index can now hold above the immediate support of 10,729 for further upsides in the coming week. Immediate resistances are at 10,940 and 10,985," said Deepak Jasani, head of retail research for HDFC Securities.
Last week, the fear of escalation of India-Pakistan military tensions and the weak macroeconomic numbers made investors little nervous. Despite this, value buying led the barometer 30-scrip Sensitive Index (Sensex) of the Bombay Stock Exchange (BSE) to gain 192.33 points (0.53 per cent).
Similarly, the wider Nifty 50 of the NSE closed in the green 71.85 points (0.66 per cent) higher at 10,863.50 points.