Additionally, high stock valuations and direction of foreign fund flows will impact the risk-taking appetite of domestic investors.
"In the coming week, investors will eye the next batch of corporate results, including Zee Enter, Asian Paints, Axis Bank, L&T, Ultratech and ICICI Bank among the larger ones," HDFC Securities' Retail Research Head Deepak Jasani said.
"The rise in the broader markets currently seems to be funded by traders and HNIs who are banking on the absence of negatives in these stocks and low institutional holdings in these stocks. This run-up could continue till around budget time," Jasani added.
Next week, companies like Kotak Mahindra Bank, Zee Entertainment Enterprises, Axis Bank, Larsen & Toubro, Biocon, Bank of Baroda, EIH, UltraTech Cement and ICICI Bank, among others, are expected to announce their Q3 earning results.
According to Jasani, mid and small-cap indices could continue to rise faster than the large-cap index even as the frontline indices grind up gradually over the next two weeks.
"Going ahead, investors should remain cautious as the markets are at an all-time high and should expect stock specific action as the Q3 earnings season progresses," said Motilal Oswal Financial Services' Retail Research Head Siddhartha Khemka.
"Also, expectations in the run-up to the budget are expected to drive certain sectors related to agri, rural, fertilizers, PSUs, infra and construction," Khemka added.
According to Vinod Nair, Research Head, Geojit Financial Services: "The pre-budget rally has been very solid on a MoM basis... the market may consolidate in the short-term and take cues from the actual budget and on-going results."
The market participants expect measures to boost consumer sentiments via budgetary announcements on enhanced state funding for mega infrastructure projects and other sops to reverse the de-growth cycle.
The Union Budget will be presented on February 1.
"The market breadth continues to favour a broad based rally towards new life time high for Nifty," said Edelweiss Professional Investor Research's Chief Market Strategist Sahil Kapoor.
"However, there is some overhead resistance coming for the mid and small-call indices as they test their ability to get past the previous high made nearly a year ago," Kapoor added.
On the technical charts, the trend of the National Stock Exchange's (NSE) Nifty50 remains positive.
"Technically, with the Nifty surging higher this week, the index remains in an intermediate uptrend.
"Further upsides are likely once the immediate resistance of 12,389 is taken out. Crucial supports to watch for resumption of weakness are at 12,278-12,224," Jasani said.
(Rohit Vaid can be contacted at email@example.com)