This week, the RBI's policy decision would be the major event driving trading sentiment in the equity market. At the same time, analysts said that global cues, foreign funds movement, and crude oil prices would be the other key factors to watch out for.
Markets have been witnessing a rebound recently. However, they added that the move lacks decisiveness amid lingering challenges like global policy tightening due to soaring inflation and geopolitical tensions.
"RBI policy, global macro numbers and crude oil prices will set the trend for this week. The outcome of the RBI policy will be announced on June 8, and it will be important to listen to RBI commentary as a rate hike is imminent. IIP data will be released on May 10 after market hours.
"On the global front, US jobless claim on Thursday and CPI numbers on Friday will be important for the direction of global markets," said Santosh Meena, Head of Research, Swastika Investment Ltd.
Crude oil is continuing its northward journey, and if it does not cool off, it may hurt the sentiment of markets. FIIs are still selling, though the momentum has slowed down a bit. However, he added, there is a risk of further selling if the rupee weakens due to a rally in crude oil prices.
Last week, the BSE Sensex advanced 884.57 points or 1.61 per cent.
"With earnings season behind us, the focus would be on the upcoming MPC's monetary policy review meet, scheduled during June 6-8. Markets have already priced in another hike citing sticky inflation.
However, the focus would be on commentary amid updates of a favourable monsoon.
"Besides, the performance of global markets and movement in crude will also be in focus. On the macroeconomic front, participants will be eyeing IIP data on June 10," said Ajit Mishra, VP - Research, Religare Broking Ltd.
Yesha Shah, Head of Equity Research, Samco Securities, said inflation is a key factor that will be the central point of all discussions this week as China and US inflation data will be released, apart from RBI's policy meeting.
"Markets are likely to remain in a broader range as we continue to monitor global cues, including geopolitical developments, crude oil price movement, and institutional flows.
"RBI's monetary policy meeting this week will be a key event that investors will track," said Siddharth Khemka, Head of Retail Research, Motilal Oswal Financial Services Ltd.