Global trends, trading activity of foreign investors, outcome of state elections and RBI's interest rate decision are the major factors that will drive the movement in the domestic equity markets this week, analysts said.

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"Global markets are currently in a fabulous mood. The US 10-year bond yield and the dollar index are also cooling off, which gives strength to the market. These factors will be closely monitored, as they have the potential to influence market sentiment," said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.

On the political front, the results of assembly elections in five states are eagerly anticipated, Gour said.

"A stable political environment could boost investor's confidence and drive the markets higher. Domestic and global macroeconomic data, trends in global stock markets, the movement of the rupee against the dollar, and crude oil will also dictate trends," he added.

From the macroeconomic data front, PMI (Purchasing Managers' Index) data for the services sector will be announced on Tuesday. RBI's interest rate decision will be announced on Friday.

"Markets will react to domestic and global macroeconomic data, global bond yields, crude oil inventories, movement of the dollar index, foreign institutional investors (FII) and domestic institutional investors' investment activities.

"Upcoming events this week will impact the market such as S&P services PMI data for major economies like India, the USA and the UK, the US initial jobless claims, employment rate, non-farm payrolls and India's interest rate decision," Arvinder Singh Nanda, Senior Vice President, Master Capital Services Ltd, said.

Last week, the BSE benchmark jumped 1,511.15 points or 2.29 per cent, while the Nifty climbed 473.2 points or 2.39 per cent.

On Friday, the Nifty climbed 134.75 points or 0.67 per cent to settle at an all-time high of 20,267.90. During the day, the benchmark reached its intra-day record high of 20,291.55.

"Frenzied buying on the back of renewed optimism from FIIs and positive European market cues lifted the benchmark Nifty to a fresh record high.

"India remains a bright spot in an uncertain global economy as the recent data indicators such as strong GDP and manufacturing numbers along with external factors like falling US bond yields are keeping markets in good stead," Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd had said on Friday.

Favourable macroeconomic data and continuous foreign fund inflows were the major drivers behind markets' rally last week.

"This week, investors' attention will mostly be directed towards the release of services PMI data from the US, India, and China. Also, the RBI policy meeting. The gradual return of FIIs in November signals positive momentum to continue," said Vinod Nair, Head of Research, Geojit Financial Services.