Inflation data, global trends to guide markets this week: Analysts

Inflation data and global trends would be the major driving factors for the equity markets this week which after a record-breaking run took a breather in recent trades, analysts said.

The overall market sentiment remains positive, supported by improving economic data and earnings but higher valuations can trigger bouts of profit booking, they said further.

During the last week, which the 30-share BSE benchmark rose by 175.12 points or 0.30 per cent.

"Global cues will continue to impact our market's behaviour and there are some macroeconomic data lined up this week like China's industrial production, US inflation numbers. On the domestic front, wholesale price index (WPI) inflation for August 2021 is due on 14 September," said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd also said that global cues would be actively tracked as fear of economic slowdown looms while Delta variant cases continue to surge.

"Even valuations are also moving beyond comfort zones and hence could lead to bouts of profit-booking and increase in volatility. But the overall sentiment in the domestic market remains positive, supported by improving economic data and positive earnings expectation," Khemka said.

Markets would also be guided by rupee-dollar trend, Brent crude and Foreign institutional investors (FIIs) movement.

"Inflation data for August will be a key data point that the market awaits this week," said Vinod Nair, Head of Research at Geojit Financial Services.

According to a note by Samco Securities Research, following a rapid rally, markets may face small bumps on the road this week.

"Bulls are taking a breather after a strong run-up but they are still holding baton to continue their march towards a new milestone as there are no signs of weakness in the Indian markets," Santosh Meena added.

According to Nair, Indian indices failed to maintain the momentum it witnessed during the week (August 30-September 3) as volatility remained high due to weak global markets and absence of any fresh domestic cues to lift the market further.

Binod Modi, Head Strategy at Reliance Securities said domestic bourses appeared to be fatigued in recent trades after witnessing record highs.

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