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Investors are closely monitoring Q4 earnings and geopolitical events, which are poised to shape market direction, says Vinod Nair, Head of Research at Geojit Financial Services.

Escalating geopolitical tensions in the Middle East, alongside supply concerns, have propelled crude prices upward, impacting overall market sentiment, he said.

Investors' hopes for a June rate cut were dashed by higher-than-expected inflation in the US, compounded by positive US employment and manufacturing data.

On the domestic front, FIIs are exercising caution given the subdued expectations for Q4 corporate earnings and the premium valuations of mid- and small-cap stocks, Nair said.

Within the IT sector, consolidation persists due to lacklustre Q4 earnings amid slowdowns in spending and uncertainties surrounding US policy rates. Profit-taking is evident in banking stocks, particularly in PSU banks, as the banking sector’s loan growth is moderating, and valuation has surpassed long-term averages, he added.

Conversely, the auto and realty sectors are showing resilience, driven by expectations of strong earnings momentum. India's CPI points towards a marginal increase in near-term inflation and industrial production may show signs of moderation, he added.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said, “We expect markets to remain volatile in the near term given the global concerns. With the onset of the earning season, the focus will shift more toward domestic cues along with macro data points. Markets on Monday will react to India’s inflation data and TCS Q4 numbers,” he said.