US Fed rate decision, inflation data likely to drive markets this week

Equity markets will keenly track outcome of the US Federal Reserve policy meeting this week amid heightened expectations of an interest rate cut along with WPI inflation data, analysts said.

Any further development on the USIndia trade front would also drive trends in the equity market, experts said.

"Looking ahead, the key global event this week will be the US FOMC (Federal Open Market Committee) meeting outcome on September 17. Markets are widely factoring in a minimum 25 bps rate cut, given signs of a slowdown in the US job market.

"On the domestic front, any further developments on the USIndia trade front will also remain a critical driver of market sentiment. Overall, FII flows will continue to play a pivotal role in sustaining momentum," Santosh Meena, Head of Research at Swastika Investmart, said.

Last week, the BSE benchmark jumped 1,193.94 points or 1.47 per cent, and the NSE Nifty climbed 373 points or 1.50 per cent. The Nifty registered its eighth straight day of uptrend on Friday, while the BSE Sensex rallied for the fifth day in a row.

"Global sentiment remains the key driver, with optimism across US and Asian markets supported by rising expectations of a Federal Reserve rate cut, fuelling risk appetite," Ponmudi R, CEO of Enrich Money, an online trading and wealth-tech firm, said.

Trading activity of foreign investors, rupee-dollar trend and movement of crude oil prices would also be crucial in directing markets trend during the week.

Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said, "Indian equity market is likely to extend its gradual up-move this week, supported by optimism around the GST led consumption growth, expectations of a US Fed rate cut and improving sentiment around USIndia trade talks.