Dalal Street is likely to trade in positive terrain this week, with foreign funds putting in more money and recovery in global markets easing worries over eurozone debt crisis, say analysts.
However, analysts did not rule the possibility of some volatility due to settlement in the derivatives segment due this week.
"There is no negative news coming in from global front and on the domestic side also the growth figures are positive. We see the market to trade in the positive territory," brokerage firm SMC Capitals equity head Jagannadham Thunuguntla said.
Analysts also said the two latest developments-- China's announcement to make yuan exchange rate more flexible and the end of row over the regulation of ULIPS -- will have positive impact on the market sentiment.
"Both the developments are significant for investors in India. While, China's move will bring some relief for traders, the ULIP row settlement will end uncertainty over investment," he further said.
Yesterday, China's central bank said it will "proceed further with the reform" of the renminbi/yuan exchange rate regime to "enhance its exchange rate flexibility".
"Investors were worried over ULIPS and after the end of row between Sebi (market regulator) and IRDA (insurance sector watchdog), fresh money from insurance firms is likely to come in the markets," Geojit BNP Paribas Financial Services Research Head Alex Mathews said.
The mixed nature of unit-linked insurance products had led to a turf war between IRDA and Sebi over the issue of jurisdiction. The matter was settled by an ordinance issued late on Friday, which gave the insurance watchdog the power to regulate ULIPS.
According to brokerage firm Indiabulls Securities, "Indian market's medium term outlook is looking bright as FIIs have made heavy purchases of local stocks over the past few days due to robust GDP, IIP and advance tax numbers."
So far in June, FIIs have invested a net $ 1.06 billion in the Indian stock markets.
Last week, Indian markets closed the week on a firm note tracking strong cues from global markets. The benchmark Sensex ended 3 per cent higher.
However, while global markets are holding out, some volatility cannot be ruled out, analysts cautioned.
"F&O settlement and global moves can bring some volatility into the markets," brokerage firm Unicon Financial said.
On the global front, major markets saw modest gains with recovery in European bourses. In the US, the S&P 500 closed up and the Nasdaq and Dow ended higher on positive cues.