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Stock markets may face volatility in a holiday-shortened week ahead amid the scheduled monthly expiry of derivatives contracts, besides global trends will continue to influence trading at the benchmark indices, analysts said.

Focus would also remain on the movement of monsoon and trading activity of Foreign Institutional Investors (FIIs).

Equity markets will remain closed on Wednesday for Bakri Id.

“As we enter a new week, the market is expected to lack clear cues, but the expiration of June’s F&O contracts may introduce some volatility as traders roll over their positions,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

On the domestic front, the movement of monsoon will be crucial, and fortunately, it is gaining momentum, Meena said.

He further added that in global markets, investors will closely monitor the movement of crude oil prices, the dollar index, and the US bond yields.

“We expect volatility to remain high due to the scheduled expiry of June month derivatives contracts this week. As we are closely eyeing the US markets for cues, the recent dip has certainly turned the mood cautious but sustainability above 33,500 in Dow Jones Industrial Average (DJIA) would keep the recovery hopes alive.

“Besides, the performance of their broader indices will also be in focus, after the bout of profit-taking,” said Ajit Mishra, SVP—Technical Research, Religare Broking Ltd.

A bearish trend in global equities and concerns over rate hikes by central banks unnerved investors last week.

“In the global context, central banks worldwide are currently focused on addressing inflation and have reiterated their commitment to achieving their target levels. This is reflected in the hawkish commentary from the Fed Chair and the rate hikes by the central banks,” said Vinod Nair, Head of Research at Geojit Financial Services.

Nair further added that despite global concerns, the domestic market is not anticipated to undergo a significant correction due to favourable domestic economic indicators and a correction in international commodity prices.

Last week, the BSE benchmark fell 405.21 points or 0.63%. The BSE barometer hit its record intra-day peak of 63,601.71 on Thursday.

Initially, the tone was positive but profit-taking in the US markets not only capped the upside but also triggered a decline in the final sessions, Mishra added.

“Global and domestic cues, trends in global markets, crude oil prices, and investment by FII/DII will be the key factors that will drive the market,” Arvinder Singh Nanda, Senior Vice President, Master Capital Services Ltd, said.