The stock market is likely to remain volatile through this truncated week. The Reserve

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Bank of India will review its money policy on Tuesday, and the outcome may set the direction for the market going forward.

Tuesday will also see the expiry of October series of F&O contracts. Frontline companies such as ITC, Sterlite Industries, NTPC and GAIL are scheduled to announce their quarterly results this week. Investors will also pay heed to global news flow, especially developments regarding the European Financial Stability Facility.

The market will remain closed on Wednesday and Thursday on account of Diwali, while Mahurat trading will take place on Wednesday.

“The market may remain volatile as investors have to grapple with a European Union summit, RBI policy meet, quarterly results and F&O expiry. The near-month October derivative contracts expire along with RBI’s monetary policy review on Tuesday. Stock-specific activity may dominate trade in the near term as earnings numbers flow in,” said Gaurav Dua, head of research at Sharekhan.

A section of market men expect RBI to raise policy rate by 25 basis points in Tuesday’s meeting.

“Despite the moderation in growth, inflation is not coming off its highs and is likely to remain elevated as underlying inflation pressures remain firmly in place. Against this backdrop, RBI should still consider inflation as the dominant concern and, therefore, continue to tighten, giving the repo rate a 25 basis points lift on Tuesday,” said Leif Lybecker Eskesen, chief economist for India and Asean at HSBC.

Kapil Gupta of Edelweiss Capital said the growth-inflation dilemma has deepened in recent months and the policy backdrop has turned challenging amid heightened uncertainty over the global economy. “We expect the Reserve Bank of India to raise policy rates by 25 basis points in its second quarter monetary policy review,” he said.

On the global front, some experts see no easy solution to the euro zone crises and, hence, expect these issues to play a major role in influencing market sentiments.

“Europe and its ability to deal with the sovereign crisis is likely to remain the main focus for global markets for the rest of 2011. Our message is simple: the European sovereign crisis is unlikely to end in a hurry. Measures announced in the forthcoming EU summit could somewhat disappoint market expectations. Hence, risk aversion is likely to persist for some time,” said Abheek Barua, chief economist at HDFC Securities.

US sequential GDP numbers and euro zone’s consumer, economic and industrial confidence data would be some noteworthy events for the week. Sensex and Nifty lost 1.76 per cent and 1.60 per cent, respectively, during the week gone by.