Investors will closely watch consumer and wholesale price inflation readings for April, as this data is the key for monetary policy action.
The Sensex and Nifty, which have so far risen about 2.9 per cent this month, closed at 2013 highs in a special trading session on Saturday. The BSE Sensex ended the day on Saturday at 20,122, while the Nifty closed at 6,107.
The Nifty and Sensex hit their all-time highs on November 5, 2010. The Nifty's all-time high of 6312 is 3.4 per cent away from its current levels, while the Sensex is shy of its record levels by 4.3 per cent.
"The effect of easy monetary policies followed by these economies will also trickle down to the Indian markets," said Binu Joseph, assistant vice- president and senior research analyst with JRG Securities.
Technical analysts said as long as Nifty does not fall below its strong support of 6,000, the chances of indices hitting new highs remain higher.
"The Nifty will touch a high of 6,250 and find support at 6,000-levels," said Ashish Chaturmohta, head-technical & derivatives research, Fortune Equity Brokers.
The consumer price index and the wholesale price index numbers are expected to be lower, according to Bloomberg poll data.
CPI, which has been in double digits, is likely to moderate to 9.74 per cent from 10.9 per cent in March. WPI, which touched a 40-month low in March at 5.96 per cent is likely to fall further to 5.45 per cent.
Shares of companies such as Reliance Infrastructure, Reliance Power, Bank of Baroda, Bajaj Auto, Dr Reddy's, United Spirits and ITC, which are scheduled to announce their results this week, could see a pick-up in activity. But, their movement is unlikely to have a bearing on the broader market.
"Results have so far been in-line with market expectations and we believe will continue to be so. What is being keenly looked at now is the guidance and outlook that will be given by these companies," said Kaushik Dani, dead - equity, Peerless Asset Management.