Parliament's upcoming Winter session and the derivatives' expiry are set to rock the equity markets during next week's trading session.

As per market observers, with the end of the earnings season, investors will be glued to political developments to see whether the government is able to pass key economic legislation during the Winter session that begins on 26 November and will run till 23 December.

"Markets will now look forward to political cues such as the passing of key bills and the government's stance towards the Opposition in ensuring the Winter session is not wasted," said Vaibhav Agarwal, vice-president and research head at Angel Broking.

Last week, the government's efforts to reach out to the Opposition before the crucial Winter session to get the Goods and Services Tax (GST) Bill passed cheered the equity markets.

Furthermore, the central government has shown willingness to amend the draft GST bill to form a consensus on the issue ahead of parliament's winter session.

The government needs to pass the GST bill in this session to meet the 1 April 2016, roll-out deadline, as just central parliamentary approval is not sufficient enough for the pan-India indirect tax regime.

The bill has cleared the Lok Sabha and is now with the Rajya Sabha, where the Congress and other parties have demanded a series of amendments. If that happens, the bill will go back to the Lok Sabha and will then have to be ratified by at least half of the 29 state legislatures.

By subsuming most indirect taxes levied by the Centre and the states, such as excise, service tax, VAT and sales tax, GST proposes to facilitate a common market across the country, leading to economies of scale and reducing inflation through an efficient supply chain.

Full implementation of GST could lift India's gross domestic product (GDP) growth by 0.9-1.7 percentage points, according to a study by the National Council of Applied Economic Research.

Investors will also be cautious ahead of the futures and options expiry next week, said market analysts.

"We are entering the F&O expiry week with VIX (volatility index) placed at the lower end, suggesting that volatility can rise in the expiry week which could lead to choppy trading sessions," said Nitasha Shankar, vice-president for research with YES Securities. "In the coming week, a move above 7,880 (on the Nifty) could trigger further short covering, taking it to levels of 8,000-8,070. However, a below 7,800 index could witness fresh selling pressure, dragging it lower to 7,720-7,660."

Gaurav Jain, director with Hem Securities, said: "Interest of foreign portfolio investors (FPIs), trends in global markets and commodity prices worldwide will dictate the trajectory of the bourses in the truncated week ahead. Indices are expected to remain in a narrow range."

The Indian equity markets will remain closed on 25 November, Wednesday, on account of Guru Nanak Jayanti.

The FPIs' participation in the Indian equity markets would be widely noticed, as recently the FPIs have gone on a selling binge.

The data with stock exchanges showed the FPIs sold stocks worth Rs 2,749.44 crore in the period under review.

The data with the National Securities Depository Limited (NSDL) showed the FPIs sold Rs.5,459.41 crore or $825.49 million in equity and debt markets from 16-20 November.

Moreover, the imminent rate hike decision by the US Federal Reserve will provide key triggers for the market, said Brijesh Ved, Senior Portfolio Manager - Equities, BNP Paribas AMC.

The minutes of the October federal reserve policy meet suggested a likely rate hike in December; this reflected confidence in the US economy to sustain a rate hike.

Nevertheless, in the short term, higher interest rates in the US are expected to lead away FPIs from emerging markets such as India.