Economic data releases, including industrial output numbers and monthly inflation data, and September quarter

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results of a few frontline companies due towards the end of the week will decide the direction of the market this week.

The domestic market, which were worst performers compared with their global peers last week, may look at the industrial production figures of European nations and the summary of US Federal Reserve’s policy meet this week. Analysts see some weakness in the market and believe a small correction is waiting to happen anytime soon.

Head of research at Geojit BNP Paribas Financial Services, Alex K Mathews, said, “We feel a correction is on the cards. Although we expect Infosys and Axis Bank to post good results, the ongoing momentum of the market is a bit negative. The results may not favour the market, unless the numbers come up above expectations.”

Axis Bank is scheduled to announce results on Thursday while Infosys will reveal its numbers on Friday. IndusInd Bank, Exide Industries, Mastek, Rallis India and Development Credit Bank are among companies whose results are due this week.

Technical charts, too, are signalling a correction anytime soon. “We expect Nifty to consolidate in the range of 5,950 and 6250 before any further breakout. After last week's correction, the overstretched momentum oscillators have dipped, but they are still not in neutral or safe zone. We feel 5,980-5,950 is a good level to buy positions with a stop loss at 5,900-5,950. The upside target will be at 6,250-6,300,” said technical analyst at Ambit Capital, Ashish Shroff.

According to a median estimate of 17 analysts by Bloomberg, industrial production for August is likely to come at 9.5 per cent compared with 13.80 per cent in the previous month.

Mathews said in a rising market, negative economic numbers often trigger profit booking by investors. However, he expects healthy economic data to support the market if the market goes into correction mode this week.

Meanwhile, the inflation for food articles for the week ended September 25 stood at 16.24 per cent compared with 14.94 per cent in the previous week.

“Assuming a 0.4 per cent month-on-month rise in the inflation of manufactured goods, we forecast September WPI inflation to be 8.7 per cent, up from 8.5 per cent in August. With the rate of inflation remaining considerably higher than RBI’s comfort range, we expect the RBI to hike policy rates by another 25 basis points in its November meeting,” Deutsche Bank fixed income research said in a note.

Sensex snapped its five-week rally last week to close at 20,250.26, 194.78 points, or 0.95 per cent, below its previous week’s close. Nifty slipped 39.95 points, or 0.65 per cent, to settle at 6,103.45.