Global trends, trading activity of foreign investors and movement of oil benchmark Brent crude would dictate terms in the domestic markets this week, analysts said.
Equity markets, which fell nearly 3 per cent last week, may face volatile trends amid the monthly derivatives expiry on Thursday.
"This week marks the September month Futures and Options (F&O) expiry, which is expected to bring about volatility in the market," said Santosh Meena, Head of Research, Swastika Investmart Ltd.
Concerns like rising crude oil prices, firm US dollar index and treasury yields coupled with continuous FII selling have been denting the sentiment in the markets, Amol Athawale, vice president - Technical Research, Kotak Securities Ltd, said.
"Global and domestic macroeconomic data, trend in global stock markets, crude oil prices, movement of rupee against the dollar, investment by FIIs (Foreign Institutional Investors) and DIIs (Domestic Institutional Investors) will be in focus.
"Market will take further cues from some key events such as the US GDP data, UK GDP and Eurozone inflation," Arvinder Singh Nanda, Senior Vice President, Master Capital Services Ltd, said.
In the past week, the BSE benchmark fell 1,829.48 points or 2.69 per cent, and the Nifty declined 518.1 points or 2.56 per cent.
Equity benchmark indices stayed on the back foot for the fourth straight session on Friday.
"Last week has seen significant profit-booking in the market, primarily driven by a steep decline in HDFC Bank, weak global cues, and substantial selling by foreign institutional investors.
"The global markets are facing challenges, particularly after the ultra-hawkish FOMC (Federal Open Market Committee) policy," Meena said.
After reaching record high levels, equity benchmark indices fell last week amid a weak trend in global markets.
"While the FOMC kept key interest rates unchanged in their recent meeting, the markets reacted negatively to the US Fed's hawkish stance on interest rates.
"Crude prices remain elevated," said Shrikant Chouhan, Head of Research (Retail), Kotak Securities Ltd.