Global cues, investment trends by overseas investors, the movement of rupee against the dollar and crude oil price would also set the tone on stock bourses, they said.
The benchmark BSE Sensex settled at a nearly four-week high of 27,887.90 and the NSE Nifty surged to near 8,400 levels last week, logging about two per cent rise. Smallcap and midcap stock indices soared by about four each, outshining largecaps.
"This week would be a crucial one for the markets as it marks the start of earning season, with IT major, Infosys reporting its quarterly results on January 9," Religare Securities president-retail distribution Jayant Manglik said.
After an indicator in the week to January 2 showed that Indian manufacturing activity expanded at its fastest pace in two years in December, markets are looking forward to the release of HSBC Service PMI data, he said.
Banking stocks would remain in focus amidst hopes of announcement of some positive news at the conclusion of two-day session on Saturday.
Finance Minister Arun Jaitley had on Saturday termed the level of bad assets in the system as "unacceptable" and promised more autonomy for state-run banks.
"We expect the markets to remain sideways this week and within the range of 8,100-8,550 levels (for Nifty) in the medium term," Bonanza Portfolio senior vice president Rakesh Goyal said.
In the global markets, data for the UK construction purchasing manager's index (PMI) for December will be unveiled on Monday, followed by the ISM Services PMI data for the US on Tuesday.
US non-farm payrolls and unemployment rate data are also scheduled for release later in the week.