Trading sentiment in the stock market this week will be guided by key macroeconomic data like Index of Industrial Production (IIP) and inflation, experts said. "Market participants are cautiously awaiting CPI and IIP data. Inflation is expected to come down to 4.74% in February which will ease bond yields in the near term," said Vinod Nair, Head of Research, Geojit Financial Services.
Epic Research Chief Executive Officer Mustafa Nadeem also noted that CPI data has been crucial for bond market and its effect on Indian equity market since last 6 month, and it was at 5.07% as compared to above 5.2 (per cent) levels.
“This week, the government will release the IIP and CPI data, which will give a sense of the economic recovery and trend in inflation, respectively. In this, inflation would be something that would be critical as its further hardening could trigger fears of rate hikes,” said Sanjeev Zarbade, Vice-president-PCG Research, Kotak Securities.
In January, retail inflation had declined to 5.07% while the inflation based on wholesale prices had eased to a six-month low of 2.84%. The inflation on the basis of Consumer price index (CPI) and Wholesale Price Index (WPI) was at 5.21% and 3.58%, respectively, in December 2017.
Meanwhile, the industrial output had grown by 7.1% in December, maintaining the recovery momentum, on the back of robust performance by manufacturing as well as higher offtake of capital goods and non-durable consumer goods.
This data will add more action since any deviation than what is expected on the street will pull a full trigger for the bears, Nadeem said.
"IIP number and consumer inflation will be key to watch in the next week as Bank Nifty has the highest weightage and is trading below the 200-day average," said Vikas Jain, Senior Analyst, Reliance Securities.
Among sectors, we remain positive on auto, private banks and consumer durables," Jain added.
The recent fall in mid-cap stocks provides a good opportunity for investors to pick stocks. We advise investors to select stocks with strong management quality, robust earnings growth and reasonable valuations,” said Zarbade.
Eight of top-10 Sensex cos lose Rs 67,153 cr in m-cap
The combined market valuation of eight of 10 most valued Indian companies plummeted by Rs 67,153.81 cr last week, with the benchmark BSE Sensecx tanking over 2%. Barring HDFC and Infosys, all the top 10 companies, including Reliance Industries (RIL), ONGC and SBI, suffered losses in their market capitalisation (m-cap) for the week ended on Friday.
RIL's valuation slumped the most by Rs 22,533.65 cr to Rs 5,77,751.85 cr. The m-cap of ONGC tumbled by Rs 12,704.90 cr to Rs 2,30,549.07 cr, while that of State Bank of India (SBI) tanked Rs 8,114.13 cr to Rs 2,18,520.44 cr.