Stock mkt to drop this week before consolidating: experts

The stock market is expected to drop before some consolidation this week as it looks towards global peers for cues and fresh triggers ahead of the Reserve Bank's monetary policy review on September 16, analysts said.

"When the market opens for trade on Monday, it will see a downslide on the back of weak global cues. Also, this week is going to be a consolidation period as the market prepares itself for the upcoming RBI policy review on September 16," Geojit BNP Paribas Financial Research Head Alex Mathews said.

Analysts also said that valuations were attractive for investors, although they remain concerned about high inflation and weak global markets.

Motilal Oswal Securities Associate VP, Parag Doctor said, "We expect the market rally to continue because most of the stocks in Banking, Auto, Tech, Real Estate are trading at attractive valuations."

However, the uncertainty in the US might hit the overall sentiment. The world's largest economy, for the first time in a year, failed to add new jobs with its unemployment rate unchanged at 9.1% in August.

The dismal jobs data pulled down the country's benchmark stocks index, the Dow Jones Industrial Average, by over 250 points to 11,240.26 last Friday.

Domestically, Doctor said that high crude prices and inflation will weigh on investor sentiment as the central bank may raise key interest rates again. It has done so 11 times since March 2010 to tame the rate of price rise.

Yet, food inflation crossed the double-digit level again to 10.05% for the week ended August 20, while the overall or headline inflation was ruling at 9.22% for the month of July.

Analysts said the markets will start factoring in the rate hike from this week itself. In its last policy meet, the central bank had its lending (repo) rate 50 basis points.

They said RBI may announce yet another 25 basis point rate hike in its mid-quarter policy review amid concerns over high inflation.

The rising interest rates have made borrowings costly for corporates, impacting their margins.