The positive mood seen in the markets this week after a gap of three weeks of continued selling will be replaced by hopes of the Goods and Services Tax (GST) bill being passed during the winter session of the Parliament, and expiry of contracts in Futures & Options (F&O) segment next week.

Overall, the benchmark indices rebounded over 1% in the week tracking a rally in global markets after US Federal Reserve hinted at raising interest rates in December but would remain cautious on further monetary tightening.

The S&P BSE Sensex gained 257.96 points or 1.01% to close at 25,868 points in the week ending 20 November, while the 50-share Nifty rose 94.30 points or 1.21% to end the week at 7,856 points.

"Nifty rebounded sharply this week to regain control above 7,800 taking cues from gains in global markets. Thursday's move has led to a breakout from a downward sloping trendline on the short-term charts. Only a move above 7,890 would confirm a breakout from a base which could push the rally higher towards 8,000 in the near term. In the process, Nifty managed to regain control above its 100-WMA," said IIFL in a note.

The gains were also driven by reforms announced by the Modi government including the stake sale in Coal India and reviving struck road projects. 

"After a debacle in Bihar state elections, BJP government attempted to catch up lost time as a spate of policy changes were announced this week," said IIFL.

"As a result, key indices after being on a constant downtrend, rose from the ashes and rallied by 1%," it said.

Markets were also supported by the salary hike recommended by the Seventh Pay Commission for government employees. Overall, it proposed a 23.55% increase in salaries, raising hopes of a boost to domestic consumption.

However, the markets saw some pressure from a sell-off in global markets following the terrorist attacks in France last week.

But going into next week, investors will closely watch the developments ahead of the winter session of the Parliament, which starts on 26 November.

The BJP-led government's defeat in the Bihar assembly elections has raised concerns over its ability to get key economic legislations passed during the winter session.

The markets will remain closed on 25 November on account of Guru Nanak Jayanti and the global events are likely to dictate the direction in the absence of any major domestic economic data release next week.

The F&O expiry for the month of November will also influence market direction next week.