With no major domestic macroeconomic data announcement this week, equity markets would keenly track the US Fed interest rate decision and other global trends to decide its further movement, analysts said.
Equity benchmarks surged to their fresh lifetime peaks on Friday.
Analysts said positive economic data and government reforms in telecom, banking and automobile sectors helped in boosting market sentiments.
"This week is going to be critical for the Indian market after a recent outperformance because there is some weakness in global markets where the outcome of FOMC's meeting, which is scheduled for September 21-22, will be a critical factor.
Other than the US Federal Reserve, the Bank of Japan will also come out with its monetary policy on September 22, said Santosh Meena, head (research) at Swastika Investmart Ltd.
The movement of the dollar index and US bond yield will play a key role in the behaviour of emerging markets like India, Meena added.
"We are in a roaring bull market and I believe it may continue for the next 2-3 years but after a long time, I am sounding a little cautious as there are some signs which indicate that a short-term correction is around the corner," Meena said.
During the last week, the 30-share BSE benchmark jumped 710 points or 1.21 per cent. Market benchmark Sensex scaled the 59,000-mark for the first time on Thursday.
"Nervousness would be seen in the market this week ahead of the US Federal Reserve meeting," said Siddhartha Khemka, head (retail research) at Motilal Oswal Financial Services Ltd.
Shrikant Chouhan, head (equity research-retail) at Kotak Securities Ltd, said the Federal Reserve will kick off a two-day meeting on September 21, and the global markets will watch for an update on their bond-buying programme.
According to a note by Samco Research, "Investors across the world will be eyeing the FOMC (Federal Open Market Committee) meeting for more clarity on the outlook for both tapering as well as interest rate timelines." Markets would also track foreign institutional investors movement, rupee-dollar trend and Brent crude.
Vinod Nair, head (research) at Geojit Financial Services, said that this week, the global focus will be on the policy meetings of a few central banks including the Fed.
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