The stock market is likely to track global events in the absence of any

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domestic cue this week. The food inflation number, which is now in double digits, would be the only domestic trigger that investors would watch eagerly as the Reserve Bank of India is set to review its money policy on September 16.

On the global front, poor jobs data from the US, released on Friday, and money policy reviews over the week by the central banks of the UK, Japan and Canada and by the European Central Bank would influence market direction.

Euro zone GDP numbers and industrial production numbers from the UK and China may also affect market sentiments. Experts said the risk-reward ratio has turned favourable for investors with a medium-term perspective. However, global risk remains a key constraint, they said.

“Notwithstanding the near-term challenges, the risk-reward ratio has turned favourable for investors from a medium term perspective. Even after taking into account the steep earnings downgrades, Sensex’s price-earnings multiple has slipped to 13.5 times FY2012E earnings, much below the average mean of around 15 times one-year forward earnings estimate. Moreover, the Street would start factoring in the FY2013 estimates from the next quarter and valuations would appear all the more attractive then,” said Gaurav Dua, head of research at Sharekhan.

Dua said key risks for the market are the rising probability of the US slipping into a double-dip recession, the possible spiralling of the crisis in the euro zone and another round of liquidity infusion-driven flare-up in the prices of commodities, including crude oil.

World Bank president Robert Zoelllick on Saturday said the world economy is heading towards a ‘new danger zone’. This may hurt sentiments.

Technically, the market recovered smartly last week after signalling oversold condition.

“We are now observing that indices have closed marginally below 20-day exponential moving average (DEMA) in Friday's session, which is placed at 5,052 for Nifty. Generally, the 20 DEMA is considered a decent support/resistance level. Therefore, we advise traders to stick to a stock-centric approach and avoid heavy trading on a positional basis,” said Shardul Kulkarni, senior technical analyst at Angel Broking.

Some experts advise accumulation of stocks on dips.

“The Street is waiting for signs of non-hawkish stance by RBI before buying fresh positions. In addition, globally all eyes will be on the Fed meet to see if there is any hint of a QE3 package. Till then our market will continue to follow global cues. We advise investors to accumulate quality stocks on every dip,” said Vivek Mahajan, head of research at Aditya Birla Money.

Mahajan said the reforms process is back on track with the first move taken by RBI to issue draft guidelines for issuing banking licences. The government has given an indication to table the Land Acquisition Bill in the ongoing session of Parliament, which is positive for various industries and the infrastructure sector.

Sensex advanced 972.63 points, or 6.14 per cent, to close at 16,821.46 on Friday. Nifty jumped 292.20 points, or 6.15 per cent, to 5,040.