IIP, inflation data to steer stock market sentiment in the week ahead

In January, retail inflation had declined to 5.07% while the inflation based on wholesale prices had eased to a six-month low of 2.84 per cent

Trading sentiment in the stock market this week will be guided by key macroeconomic data like Index of Industrial Production (IIP) and inflation, experts said.

"Market participants are cautiously awaiting CPI and IIP data. Inflation is expected to come down to 4.74 per cent in February which will ease bond yields in the near term," said Vinod Nair, Head of Research, Geojit Financial Services.

Epic Research Chief Executive Officer Mustafa Nadeem also noted that CPI data has been crucial for bond market and its effect on Indian equity market since last 6 month, and it was at 5.07 per cent as compared to above 5.2 (per cent) levels.

In January, retail inflation had declined to 5.07 per cent while the inflation based on wholesale prices had eased to a six-month low of 2.84 per cent.

The inflation on the basis of Consumer price index (CPI) and Wholesale Price Index (WPI) was at 5.21 per cent and 3.58 per cent, respectively, in December 2017.

Meanwhile, the industrial output had grown by 7.1 per cent in December, maintaining the recovery momentum, on the back of robust performance by manufacturing as well as higher offtake of capital goods and non-durable consumer goods.

This data will add more action since any deviation than what is expected on the street will pull a full trigger for the bears, Nadeem said.

"IIP number and consumer inflation will be key to watch in the next week as Bank Nifty has the highest weightage and is trading below the 200-day average," said Vikas Jain, Senior Analyst, Reliance Securities.

Among sectors, we remain positive on auto, private banks and consumer durables," Jain added.