Trade moves, inflation data, FII flows likely to drive markets this week

Stock markets will be driven by inflation data, trade-related news, earnings and trading activity of foreign investors in a holiday-shortened week, analysts said on Sunday.

Global market trends will also influence trading sentiment this week, they added.

Equity markets would remain closed on Friday for Independence Day.

"This week, attention will turn to domestic CPI and WPI inflation data. Developments in the USIndia trade relations will also remain in focus amid ongoing discussions over a trade agreement. The earnings season is nearing its end, with key results due from Ashok Leyland, ONGC, IOC, Hindalco Industries, BPCL and others, which could drive stock-specific action," Ajit Mishra SVP, Research, Religare Broking Ltd, said.

Extending losing streak for the sixth consecutive week, the BSE benchmark dropped 742.12 points or 0.92 per cent, and the Nifty declined 202.05 points or 0.82 per cent.

"Key factors to watch this week are trade negotiations, macroeconomic data, earnings and FII flows," Santosh Meena, Head of Research, Swastika Investmart, said.

Any updates or posturing from India and the US will remain a primary market driver, he said.

"India, the US, and China will release key numbers, with US inflation data (12th August) being especially crucial in the backdrop of higher tariffs. India's inflation numbers will also be released on the same day," Meena noted.

The Q1 earnings season is nearly over, but a few companies are yet to announce results, potentially triggering sector-specific moves, he said.

Foreign investors have pulled out nearly Rs 18,000 crore from Indian equities so far this month.

"Looking ahead, markets will enter the final leg of the Q1 earnings season, which is expected to drive stock-specific moves. Overall, we expect equities to remain in consolidation mode until there is clarity on the tariff front. In this volatile environment, investors may focus on domestic-oriented themes, while traders are advised to keep positions light," Siddhartha Khemka - Head Of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said.