The RBI's policy decision would be the major event driving trading sentiment in the equity market this week, while global cues, foreign funds movement and crude oil prices will be the other key factors to watch out for, analysts said.

Markets have been witnessing a rebound recently. However, the move lacks decisiveness amid lingering challenges like global policy tightening due to soaring inflation and geopolitical tensions, they added.

"RBI policy, global macro numbers and crude oil prices will set the trend for this week. Outcome of RBI policy will be announced on 8th of June and it will be important to listen to RBI commentary as a rate hike is imminent. IIP data will be released on 10th May after market hours.

"On the global front, US jobless claim on Thursday and CPI numbers on Friday will be important for the direction of global markets," said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Crude oil

Crude oil is continuing its northward journey and if it does not cool off, then it may hurt sentiment of markets. FIIs are still in selling mode, though the momentum has slowed down a bit. However, there is a risk of further selling if the rupee weakens due to a rally in crude oil prices, he added.

Last week, the BSE Sensex advanced 884.57 points or 1.61 per cent. "With earnings season behind us, focus would be on the upcoming MPC's monetary policy review meet, which is scheduled during June 6-8. Markets have already priced in another hike citing sticky inflation. However, focus would be on commentary amid updates of a favourable monsoon.

"Besides, performance of global markets and movement in crude will also be in focus. On the macroeconomic front, participants will be eyeing IIP data on June 10," said Ajit Mishra, VP-Research, Religare Broking Ltd.

Yesha Shah, Head of Equity Research, Samco Securities, said inflation being a key factor will be the central point of all discussions this week as China and US inflation data will be released, apart from RBI's policy meeting.

"Markets are likely to remain in a broader range as we continue to monitor global cues, including geopolitical developments, crude oil price movement as well as institutional flows. RBI's monetary policy meeting this week will be a key event that will be tracked by investors," said Siddharth Khemka, Head-Retail Research, Motilal Oswal Financial Services Ltd.