After the last week's rally that saw key market index Sensex regaining the 18,000-level , investors expect strong domestic trends to take the market further up, experts said.
"Stock market may witness some action with an added dose of volatility due to the F&O expiry. With July 1 falling on the last trading day, markets will also closely watch data on auto and cement sales, besides economic statistics on trade and manufacturing," IIFL Head of Research (India Private Clients) Amar Ambani said.
During the past week, the Bombay Stock Exchange key index Sensex went up 370.15 points, or 2 per cent, to end the week at 18,240.68. The Sensex surged by over 500 points on Friday on the back of sharp dip in global crude oil prices and firm overseas cues.
Analysts opined that global events will continue to have some bearing on local sentiment. Greece and the US economy will remain in focus and the Chinese manufacturing PMI data will also be on the investors' radar.
The government on Friday decided to increase diesel price by Rs 3 per litre, domestic LPG by Rs 50 per cylinder and kerosene by Rs 2 per litre, while slashing customs and excise duties on crude oil and products.
Market analysts said government policy on fuel price hike will influence the market trend, and added that the hike in diesel and LPG prices will be well received by the markets.
"We expect the rally may continue after the fall in crude oil price and recovery in the global market. Many frontline and mid-cap stocks are trading at an attractive valuation with a few weeks left to first quarter FY12 quarterly result announcement. Improvement in monsoon is also an important factor that will influence the market trend," Motilal Oswal Securities Associate VP Parag Doctor said.
Oil prices fell on Thursday after International Energy Agency decided to release 60 million barrels of crude, giving global economy relief from high energy costs.
The New York crude on Friday tumbled nearly 5 per cent to about $90 a barrel, while Brent Crude plunged $7 to about $107 a barrel.
Some experts were of the opinion that markets will open slight higher on Monday, but profit-booking can bring down some of the gains.