Stock market sentiment in the days to come would be driven by the country's first biggest economic event of the year, Union Budget due on February 1, say experts.
"This time market is approaching the Union Budget with very high expectations as this is the first budget after demonetisation. The market perceives the budget as an opportunity to fix the derailment caused to the growth trajectory," India Nivesh said in a report.
"The upcoming budget will be a key event from an equity market perspective. We believe the expected measures to reduce tax liability for individuals may provide a much-needed boost to the consumer-related sector," Motilal Oswal Securities said in a report.
On the earnings front, Bajaj Auto, ICICI Bank, ONGC and HDFC will announce their quarterly numbers this week.
"Going ahead, budget will be main focus area. Quarterly results have reflected muted impact of demonetisation till date. It will be of interest to see how the remaining companies fare on this front. Markets will closely track the US dollar to gauge the flows into emerging markets," said Dipen Shah, Sr VP - PCG Research, Kotak Securities.
On the macro front, PMI data on manufacturing and services sector will also influence trading sentiment.
"The ongoing rally has gained momentum which is likely to become wild as an important event of budget will unfold this week," said Jimeet Modi, CEO, SAMCO Securities.
Over the last week, the Sensex recorded a gain of 847.96 points, or 3.13 per cent, while Nifty zoomed 291.90 points, or 3.49 per cent.
"Budget is full of market moving news about various sectors and companies which turn into volatility. Till the time budget is tabled market will consolidate," said Abnish Kumar Sudhanshu, Director & Research Head, Amrapali Aadya.
"The first half of following week is expected to be quiet as markets would be holding with bated breath on the likely announcements in the budget," said Vijay Singhania, Founder-Director, Trade Smart Online.
"Post budget, focus is likely to move to the state elections," Singhania added.
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