Fed policy, WPI inflation data to guide markets this week

Stocks on Monday will react to tepid IIP growth and lower retail inflation figures released after markets closed Sept 12

Indian stock markets will take cues from the US Federal Reserve's monetary policy review and WPI inflation data release due this week, say experts.

Stocks on Monday will react to tepid IIP growth and lower retail inflation figures released after markets closed Friday. Inflation data based on wholesale price index (WPI) for August is expected to be released on Monday at around noon.

Trend in investment by overseas investors, movement of rupee against the dollar and crude oil price would continue to dictate trading in the stock market for the week.

Global markets will track US Federal Reserve's two-day meeting ending on Wednesday. Investors are keen on knowing the US interest rate trajectory as there are concerns that an early hike may lead to capital outflows from emerging markets.

Over the past week, the BSE Sensex gained 34.34 points to close at 27,061.04 and Nifty rose about 19 points to end at 8,105.50.

"This week is going to be an eventful one as market participants will be seen reacting to macro-economic data of IIP and CPI inflation in early trade on Monday, followed by WPI inflation data. Besides, they will be taking note of advance tax payment by listed corporates, which is also due to be released on September 15 and will provide clues about Q2 September corporate earnings.

"Additionally, they would also be eyeing the crucial US Federal Reserve's monetary policy review," said Jayant Manglik, President retail distribution, Religare Securities Limited.

Analysts said while global factors will be key, the local focus will also be on economic data as the RBI is set to review its monetary policy stance on September 30.

Continuing to bet on the government's reforms agenda, overseas investors have pumped in a whopping Rs 17,000 crore in the Indian capital market since the beginning of this month.

"It's raining money for Indian equities and the Indian markets have been the best performers among all emerging economies riding on FII inflows," said Aman Chowdhury, CEO and Co-Founder, Cians Analytics.

While the market mood is positive, a flare-up of tension in the Middle East could hit sentiments.

"Overall markets look positive and trade positions, market activity, derivatives positions, sentiments - all indicate towards a healthy market movement in this week. Sudden tension in US-Syria, Iraq crisis led to downgrade in global risk appetite.

"We may see steep movements in INR/dollar rates, gold prices and equities if the tensions continue to remain aggravated," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio Ltd.