BSE Sensex and NSE Nifty may remain volatile in the short term as traders remain wary of foreign flows after overseas investors sold over $1 billion worth of shares in the 10 sessions through Thursday ahead of June quarter GDP data later in the day.
Prime Minister Manmohan Singh on Friday said April-June GDP growth would be flat.
A Reuters poll of 36 economists expected India's gross domestic product to have expanded 4.7 per cent year-on-year in the quarter to June, near decade lows on an annual basis and a tad under the 4.8 per cent growth in the previous three months.
The Indian rupee will also be on watch to see whether a reversal from a record low of 68.85 is sustainable. It continues to remain vulnerable to any talk of US tapering, while a worsening fiscal deficit could also weigh on it.
Traders are also hopeful of more market friendly measures like a hike in diesel price after the passage of the Land Legislation bill and the Food Security bill by the parliament was seen as populist.
KEY FACTORS/EVENTS TO WATCH
Saturday: Trade Minister Anand Sharma will be present for an industry event in Mumbai at 1145 IST.
Monday: Automakers in India report monthly sales for August; Manufacturing PMI for August
Wednesday: Money supply data
Thursday: Bharti Airtel Ltd annual shareholders meeting