A woman speaks on her phone as she walks past the Bombay Stock Exchange building in Mumbai.Reuters

The continuation of recent strength in the Indian stock markets remains in doubt going by Greece referendum, in which the Greeks will decide on accepting the terms of the country's creditors.

Domestic stock markets rose 1.6% in the past four trading sessions on the hopes that Greek voters would say 'yes' to austerity measures in the referendum.

However, a 'no' vote in the referendum could increase the possibilities of Greece leaving the eurozone and could rattle the global stock markets including India's.

Analysts expect the benchmark equity indices to plunge more than 3% in the early sessions next week, if Greeks votes against market expectations.

"If there is 'no' vote from Greece, then there would be knee jerk reactions across the globe. Indian markets may absorb most of the negative news and Nifty may take support at 8200 levels," Yogesh Radke, head of quantitative research at Edelweiss Capital, told The Economic Times.

Further, lack of heavy short positions to curtail the fall in markets is also a cause of concern.

"If there is disappointment from Greece, Nifty can drop to 8200 levels." said Dharmesh Shah, head, technical at ICICI Direct.

The NSE Nifty index closed 8484.90 on Friday, up 40 points or 0.47%. The BSE Sensex gained 146.99 points to end at 28092.79.

This week, markets remained strong on the reports of above normal monsoon rainfall across the country, even though there was some volatility on Monday. Better-than-expected monsoon rainfall raaised expectations of interest rate cut by the Reserve Bank of India (RBI) as early as August.

Nevertheless, India VIX, a gauge of market volatility, went up by 4.8% to 16.30 on Friday, indicating that the investors remain jittery over the outcome of Greece referendum.

"There will be volatility in markets if there is a 'no' vote but that won't be material because currently the European Union is running a huge quantitative easing programme which would give support to global markets," said Gopal Agarwal, chief investment officer at Mirae Asset Global Investments.

Stock markets may continue their rally if Greeks say 'yes' to the conditions set by the lenders to the country.

"If things remain positive, we expect Nifty to extend its rally to 8850 level," said Shah.

Besides Greece referendum, the other triggers for the markets this month will be inflation figures, quarterly results and progress in monsoon rains.

Investors also await the passage of the landmark Goods and Services Tax (GST) Bill by the Modi government in the forthcoming monsoon session of Parliament. However, the chances of the Bill being passed in this session also looks slim.

Stock to Watch

Auto stocks such as Tata Motors, Bharat Forge and Motherson Sumi, which have a major presence in the eurozone, may come under pressure. These stocks witnessed a heavy sell-off on Monday on the reports that Greece would default on loan payment to the International Monetary Fund (IMF).

Shares of IT companies such as Tech Mahindra, Wipro, HCL Tech and Tata consultancy Services (TCS) that derive a major part of their revenues from the region, may also see selling pressure. A fall in euro on Grexit fears may hit the revenues of Indian IT companies.