With the September series derivatives contracts expiring on Thursday (27 September 2012), the market is likely to see immense volatility next week.
News out of the U.S. and Europe and cues from the domestic front will dictate the trend. The government, which notified FDI in retail, broadcasting and aviation sectors last week, is expected to come out with more announcements on the reforms front and traders are likely to keep an eye on the same.
Shares from the power sector will see action amid expectations that the government wil measures to augment resoruces of the sector.
Investors will also be awaiting the outcome of a cabinet meeting scheduled for discussing a reduction in sugar subsidies.
Friday's flat close on Wall Street amid persisting worries about the eurozone economy is likely to set up a cautious start for Asian markets on Monday. The mood back home is also likely to be cautious, albeit with a slightly positive bias.
Though some profit taking is not ruled out after Friday's strong upmove, Indian stocks are unlikely to see a sharp slide as investors, read FIIs, are likley to bet on more positive news on the reforms front.
However, with the reporting season about to commence in a couple of weeks, the mood, by and large, will remain cautious for now. High inflation is a cause for concern.