Global trends and the COVID situation in China would drive the equity markets this week, which may also see volatility amid the scheduled derivatives expiry on Thursday, said analysts.

According to analysts, investor sentiment remained subdued last week amid surging COVID cases in China and a few other nations. Also, stronger US growth data has cemented expectations of the Federal Reserve continuing with its hawkish stance, which added to the muted trend.

Last week, the Sensex tumbled 1,492.52 points or 2.43 per cent, while the Nifty tanked 462.20 points or 2.52 per cent.

"The scheduled derivatives expiry of December month contracts would keep participants busy. Besides, the performance of global indices amid the rising fear of COVID cases will further add to volatility," said Ajit Mishra, VP - Technical Research, Religare Broking Ltd.

Movement of rupee, Brent crude oil and foreign fund trading activity would also be watched by investors during the week.

"COVID case count in China and concerns about possible recession will continue to influence the global equity market in the near term," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd.

Vinod Nair, Head of Research at Geojit Financial Services, said the market volatility is expected to persist as investors closely track mounting COVID cases in China.

"COVID worry has become an excuse for a sell-off, and its related news will continue to impact the direction of the market. Apart from that, crude oil prices and rupee movement will be other important factors," said Santosh Meena, Head of Research, Swastika Investmart Ltd.

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