According to analysts, a steep drop in crude oil has encouraged investors. Also, the main indices had fallen for nine straight days. So, some sort of recovery is always on the cards after such a big sell off.

"We expect the market will bounce back after a sharp decline. The positive factor is that the Brent crude oil has declined to one-month low at USD 110 barrel after a recent high of USD 126 a barrel.

Food Inflation has also cooled down to a 3-week low at 8.53 per cent," Motilal Oswal Securities Associate VP Senior Analyst Technical Equities Parag Doctor said.

But at the same time, market observers cautioned that one should not get carried away by any short-term spike.

"Volatility has been high and is likely to stay that way for a while. The good news for India is that crude oil has come off sharply. One has to see whether the Government will go ahead and hike fuel prices next week," IIFL Head of Research (India Private Clients) Amar Ambani said.

The Bombay Stock Exchange's 30-share index Sensex fell by 617.15 points, or 3.22 per cent, to settle at 18,518.81 during the last week.

Interest sensitive sectors like banking, auto and realty fell by 5-10 per cent during the week.

Last week's fall was attributed to the RBI hiking key policy rates by 50 basis points. Moreover, the RBI unexpectedly hiking savings deposit rate to 4 per cent also hurt the market sentiment, they said.

Bluechip companies like Hindustan Unilever, HDFC and Ranbaxy Laboratories, will announce their quarterly numbers this week.