MUMBAI, April 13 -- The failure of US-Iran talks in Islamabad to resolve the war threatens last week's market rebound, with traders bracing for a volatile Monday session as weekly Nifty options expire.

"This is bad news. (it) puts at risk last week's recovery," said Nirmal Jain, founder of IIFL Group, on the likely impact of the failed talks between the warring sides.

Analysts said foreign portfolio investor (FPI) positioning in derivatives will likely drive near-term market direction, after last week's rally was powered largely by short-covering tied to optimism around a ceasefire.

Jain said foreign investors, who have been selling India through the equity cash and derivatives markets, could step up their bearish build-up after last w...