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Investors are awaiting earnings reports in the coming week to determine their trading direction, said Vinod Nair, Head of Research at Geojit Financial Services.

The initial weakness in the domestic market was driven by anticipated soft earnings in the IT sector and negative cues from the US markets.

Concerns arose from an uptick in domestic food inflation, influenced by higher mandi prices trending above Minimum Support Prices (MSP), and muted Kharif sowing, which led investors to exercise caution, he said.

The progression of the monsoon and the trend of Kharif sowing in July will be crucial factors in determining future inflation.

However, controlled inflation in the US has instilled optimism among investors, who believe that a 25-bps rate hike would be sufficient to stabilize the US economy. This positive outlook has contributed to strong buying in Indian IT stocks, despite muted Q1 earnings, he added.

Consequently, the US dollar and bond yields have fallen. The broader Indian market traded positively, reaching all-time high levels, on expectations of buoyant Q1 results, consistent FII inflows, decreasing wholesale prices, and low volatility (VIX).

Among the sectors, Nifty Bank performed weaker as it started the earnings season on a low note.

Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services, said that going ahead, the market will keenly watch out for merged HDFC Bank results on Monday which now holds 29 per cent weightage in Nifty Bank.

“As we fully enter into quarterly earnings season, stock specific action would pick up steam. Moreover expectation of good quarterly results, consistent FIIs buying interest and good progress on the monsoon front would keep the overall trend of the market positive," he said.