Corporate earnings will continue to set the tone for stock markets this week, with Maruti Suzuki and Hindustan Unilever among the companies that will announce October-December quarter results, say experts.

Other major third quarter results to be announced this week are: HDFC, NTPC, Cairn India and L&T.

"Markets may remain sideways to positive in coming days, on positive international cues and moderately good set of numbers from the corporate Inc," said Alex Mathews, Head Research, Geojit BNP Paribas Financial Services.

Besides earnings, investors will also look for signs on key rate cut in the RBI policy review slated for January 29.

Last week, the BSE 30-stock index, Sensex, closed above 20,000 points after two years due to strong buying in refinery, realty and PSU equities, spurred by partial deregulation of diesel prices and the government decision to defer the implementation of controversial anti-tax evasion proposal GAAR.

In bold reforms, the government on Thursday moved towards deregulating diesel when it raised prices by 50 paise per litre and planned similar monthly hikes in future to cut record subsidies.

According to Rakesh Goyal, Senior Vice President, Bonanza Portfolio: "Increase in diesel price can lead to higher inflation in the coming months, and puts a question mark on whether the Reserve Bank may still put a hold on rate cuts. Volatility may be witnessed in coming sessions."

Rate cut hopes were dented last week by RBI Governor D Subbarao's view that inflation is "still high".

"When growth is slowing down, you can stimulate the economy either by monetary easing or by fiscal stimulus, but both monetary and fiscal side have no room for stimulus... Inflation has come down, (it is) still high," Subbarao had said in Lucknow.

Stock market participants will also closely track foreign fund flow in the equity market.

Overseas investors have pumped in over Rs 13,000 crore (about $2.5 billion) in the Indian equities so far this month.