BSE Sensex may remain volatile in the short term as traders remain wary of foreign flows after overseas investors sold a net $701.4 million worth of shares in the five sessions through Thursday ahead of June quarter GDP data and the expiry of August derivatives contracts.
India will report June quarter GDP on Friday, which will indicate how much the economy has slowed. It had recorded a 4.8 percent growth in the previous quarter.
Finance Minister P. Chidambaram said on Thursday the economy did not rebound in the quarter ended in June but will begin to in the rest of the financial year.
The Indian rupee would be watched after what appear to be the first signs of reversal in the currency's short-term trend as it recovered on Friday after six straight sessions of losses, dealers said.
The Indian rupee will remain vulnerable to any talk of U.S. tapering, while a worsening fiscal deficit could also weigh on it.
Also watched, Fed vice chair Janet Yellen's speech in Jackson Hole over the weekend.