Macro data to dictate trend; stocks to see volatility

New Delhi: As the third-quarter earnings season comes to a close, stock markets would take cues from inflation data to be announced on Monday and are likely to see increased volatility with focus shifting to the Union Budget, say experts.

"With the results season close to an end, we will not have significant triggers for Indian markets this week. Inflation data and IIP will drive action as will expectations of the budget," said Ravi Shenoy, AVP-Midcaps Research, Motilal Oswal Securities Ltd.

"Market is likely to see higher volatility in the near term," said Jimeet Modi, CEO, SAMCO Securities.

Stock markets may react to data on consumer price inflation for January and industrial production data for December 2015 on Monday.

Remaining in the negative zone for the second month, industrial output in December shrank 1.3 percent while retail inflation in January edged up to a 16-month high, prompting the industry to call for urgent policy action in the forthcoming Budget to spur revival.

Meanwhile, data on inflation based on wholesale price index (WPI) for January is due to be released on Monday.

"With the quarterly results season nearly over, focus will shift to the budget and we can see sector specific movements over the next few days. However, global factors will continue to have an impact.

"With the Chinese markets scheduled to open on Monday after a week-long gap, movements in that markets will impact sentiments," said Dipen Shah, Head of Private Client Group Research, Kotak Securities.

Market experts said that the next major trigger for the stock market will be Railway and Union Budget 2016-17, to be announced later this month.

"We expect the prevailing slide in the stock market to continue in the coming week. For any sustainable recovery, markets need to stabilise first but that seems difficult, considering the pace of decline in the passing week," said Vijay Singhania, Founder-Director, Trade Smart Online.

Last week, markets saw massive selling as both the key indices recorded their biggest weekly fall since July 2009 with Sensex falling 1,631 points or 6.62 percent and Nifty down 508.15 points or 6.78 percent.

Sinking to its lowest level in 21 months, Sensex on Thursday crashed 807 points to drop below 23,000-mark on concerns over global economy and mounting bad loans.