Market Outlook: The direction of the local stock markets will be decided by the macroeconomic data coming this week, the trading activities of foreign institutional investors and global trends. It is worth noting that this week will also mark the beginning of a new calendar year and a new month. Investors will also keep an eye on the movement of the rupee, which on Friday suffered the biggest fall in almost two years, after which the rupee reached its lowest level ever.

Santosh Meena, Head of Research, Swastika Investmart, said, "Continuous FII (foreign institutional investor) selling has been a source of pressure on Indian markets. Their stance in the new year can shape the near-term trends. Meanwhile, monthly vehicle sales data will also be closely watched. With the third quarter financial results coming out, market movement will also be influenced by that."

On the international front, key economic indicators such as China and US manufacturing PMI data and US unemployment claims will play an important role, Meena said. However, he added that the dollar index and US bond yields remain the most important factors influencing the direction of global markets. Auto stocks will also be in the spotlight this week amid the announcement of monthly sales data.

Ajit Mishra, Senior Vice President (Research), Religare Broking Ltd said, “As we enter the new calendar year and month, vehicle sales data will be closely monitored for early market cues. In the absence of any significant event, focus is likely to remain on FII flows and currency movements, especially as the rupee is weakening against the US dollar. These factors may play a key role in determining market direction in the near future.”

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Last week, the 30-share BSE Sensex rallied 657.48 points, or 0.84 per cent, while the National Stock Exchange Nifty gained 225.9 points, or 0.95 per cent. "Looking ahead, the market is likely to be keenly focused on the upcoming third quarter results, which will play a key role in determining the market direction. Investors are likely to align their portfolios based on pre-budget expectations," said Vinod Nair, head of research at Geojit Financial Services.

He said, “Apart from this, key data like PMI data from India, America and China and unemployment claims in America will affect the sentiment of investors.”

An analyst said that last week witnessed consolidation with volatility during the day. He said that due to Christmas and New Year holidays, FIIs traded less and remained net sellers.

Punit Singhania, Director, Master Trust Group, said, "Market sentiment will be guided by key domestic and global economic data like India infrastructure data, manufacturing PMI, UK S&P global manufacturing PMI, US initial jobless claims."

“With no significant triggers in the near term, the markets are likely to remain range bound,” said Siddhartha Khemka, Head of Research (Wealth Management), Motilal Oswal Financial Services Ltd.