The market is seen on hold ahead of the RBI's rate review on Tuesday.
Most analysts expect the RBI to leave interest rates on hold and say the RBI could instead cut the cash reserve ratio.
An unexpected jump in industrial output and lower-than-expected inflation are reinforcing hopes the RBI could start cutting interest rates in January.
Further traction on reforms are also anticipated as the winter session of parliament is due to end on December 20.
The government has already approved or passed a slew of fiscal and economic reforms, but bills are pending on banking, pension and insurance.
KEY FACTORS/EVENTS TO WATCH:
Saturday: Prime Minister attends an industry event in New Delhi
Tuesday: RBI reviews monetary policy
Thursday: Parliament's winter session ends, India hosts ASEAN summit
Friday: Weekly forex reserves, bank loan data.