Key inflation data and a slew of corporate results, along with strong global cues, could lead to a rally.
The week gone by saw National Stock Exchange's Nifty lose 1.6 per cent, while the high-beta Bank Nifty lost 2.58 per cent.
However, the real weakness persisted in the broader markets, with the Nifty Midcap 50 losing 3.97 per cent.
Technically, the Nifty has closed below its 50 DMA (day moving average) at 5,952. This figure will now act as resistance, while support comes at 100 DMA at 5,815.
The Bank Nifty will take support at its 100 DMA at 12,000 and face resistance at 12,531, which is the 50 DMA.
The highlight of the past week was the successful divestment of NTPC where the government raised Rs 11,500 crore by selling a 9 per cent stake. This will go a long way in helping bridge the fiscal deficit, and indicates the disinvestment drive is on.
Globally, US indices continue to lead the global rally, with the Dow Jones within 100 points of an all-time high. Oil prices continued to climb and hit a near six-month high, while gold prices continued to fall and closed at near three-month lows.
The market will now keenly await inflation data due on Tuesday. Ant reading below 7 per cent could trigger a sharp pullback rally in stocks since that could lead to another rate cut by the RBI in its March policy.
Another positive for the Indian markets would be the fall in gold prices which have hit three-month lows and are indicating money exiting the bullion market and entering the stock market.
Tracking the 'A' Group stocks, the top-three gainers were Essar Oil, up 8.18 per cent; TCS, up 6 per cent; and United Spirits, up 5.98 per cent.
While the top-three losers were JP Associates, down 15.93 per cent; Opto Circuits, down 14.8 per cent; and India Bulls Financial Services, down 13.06 per cent.
Markets are undergoing a healthy correction after a stellar two-month rally and seem set to attempt a pre-Budget rally in the coming fortnight.