IIP, inflation data to guide market mood this week

Stock markets are likely to witness volatile trading in the coming week in view of industrial output and inflation data that are lined up for release, according to experts.

That apart, there are indications that the government may hike fuel prices impacting market sentiment.

While stock markets may open on a bullish note following European Central Bank's announcing last week a bond-buying plan to revive euro-zone's ailing economies, key triggers for domestic markets in the form of IIP numbers and inflation data will appear from the middle of the week.

July's industrial output data will be released on September 12, and August headline inflation figure on September 14.

While slowdown in economic growth has made investors cautious, inflation remains above the comfort level of the government as well as the Reserve Bank, keeping interest rates high.

The new data will provide key inputs for a decision on interest rates coming ahead of RBI's monetary policy review on September 17, analysts said.

"Concerns over slowing growth and high level of inflation in the economy are expected to persist in the near-term. The Indian markets continue to take positive cues from global events in spite of the weak domestic economic and political environment," Angel Broking said in a report.

It further said that RBI is unlikely to cut key rates in the mid-quarter review of the policy due next week since upside risks to inflation continue to persist.

Macroeconomic concerns may prompt investors to book profits at higher levels after a smart rally in the market last week, analysts said.

"It will not be easy to hold on to the gains amid growing concerns about the economy and the government's ability to push through key reforms," an expert said.

Besides, the government is widely expected to hike petrol, diesel, cooking gas and kerosene prices simultaneously in the coming week.

While the move will ease pressure on oil marketing companies, high crude oil prices remain a concern for the markets for the fear of fanning inflation.

On NSE index Nifty's weekly outlook, Rakesh Goyal, Senior Vice President, Bonanza Portfolio, said: "For the coming week, if Nifty sustains above 5,350, likely upside target shall be 5,400-5,450. On the other hand, if it goes below the 5,300 level, further selling pressure is likely up to 5,280-5,250."

On the global front, the Federal Open Market Committee (FOMC) will hold meeting on September 12-13 and markets will keenly await its outcome.