In the absence of major domestic triggers, equity market would turn its focus on global events mainly US financial stimulus update and development related to COVID-19 vaccination in the holiday-shortened week ahead, analysts said.
The domestic market may also witness profit-booking at record levels.
Financial markets will remain closed on Friday for Christmas.
"Going ahead, the markets may continue with its positive bias on the back of abundant liquidity, effective vaccine rollout and increasing prospects of a US financial stimulus. However, intermittent profit-booking cannot be ruled out as the Christmas vacation starts from this week," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.
Markets could also be volatile given monthly futures and options (F&O) expiry, he added.
"This week, market will be maintaining its focus on global events, as a decision on the US stimulus package and Brexit deal can be expected in the coming days," Vinod Nair, Head of Research at Geojit Financial Services said.
Investment pattern of foreign portfolio investors (FPIs), a major driver of Indian equity markets, will also be tracked by investors.
Sumeet Bagadia, Executive Director, Choice Broking said, "Investors will continue to monitor development related to COVID-19 vaccination, stimulus update and Brexit trade deal." "Currently, indices seem to be in the hands of all-charged bulls and the mighty bear seem to have given up. However, one cannot rule out mild profit-booking on the way up," said Nirali Shah, Senior Research Analyst, Samco Securities.
Over the past week, the BSE benchmark gained 861.68 points or 1.86 per cent.