Accordingly, healthy macros, as denoted by the rise in Index of Industrial Production (IIP) will attract foreign capital to the equity markets on the prospects of faster economic growth.
Besides, the expected easing of retail as well as wholesale inflation points is likely to boost buying sentiments.
However, global worries such as prospects of US Fed withdrawing stimulus, the spread of Delta variant, slowing global growth, and China's regulatory tightening might cap gains.
"The broader market rally seems to be fizzling out, though a small bounce in it cannot be ruled out," said Deepak Jasani, Head of Retail Research, HDFC Securities.
"Nifty could remain in the 16,540-16,280 band for the better part of the coming week."
According to Siddhartha Khemka, Head - Retail Research, Broking and Distribution, Motilal Oswal Financial Services: "The market might consolidate for some time on account of weak global cues."
"Even valuations are also moving beyond comfort zones and hence could lead to bouts of profit booking and increase in volatility."
Furthermore, Khemka cited that overall sentiment in the domestic market remains positive, supported by improving economic data and positive earnings expectations.
"Healthy 1QFY22 earnings delivery has boosted hopes for a solid FY22 with more than 30 percent projected Nifty earnings growth, on the back of a strong 15 percent earnings growth in FY21."
Additionally, Vinod Nair, Head of Research at Geojit Financial Services said: "The inflation data for August will be a key data point that the market awaits in the coming week."
"Retail inflation is expected to remain high in line with the July inflation rate of 5.59 percent while wholesale inflation is expected to ease from the previous level of 11.16 percent."
Notably, retail inflation is expected to remain within RBI's comfort zone.
The coming week would also witness the release of retail inflation or the Consumer Price Index (CPI) for August on Monday.
A day later, the Wholesale Price Index-based inflation numbers will be released.
In addition, the Index of Industrial Production (IIP) for July released last Friday showed that the factory output grew by over 11 percent from a decline of 10.5 percent reported for the like month a year ago.
The IIP numbers are expected to give an initial boost to markets on Monday morning, the first trade session after an extended weekend.