Geopolitical developments, macro data release to dictate market terms this week:

Investors in the coming week will closely follow developments surrounding India-China border tensions, which have been a worrying factor for the equity market as well, besides focusing on key macro data release and global cues, according to analysts.

Both benchmarks Sensex and Nifty saw a good recovery last week after a correction of over 2.5 per cent in the previous week.

The BSE Sensex zoomed 497.37 points or 1.30 per cent, while the NSE Nifty gained 130.60 points or 1.15 per cent during the trading week ended on September 11.

A massive rally in index heavyweight Reliance Industries also drove the benchmark indices higher, though uncertainties around economic recovery, rising Covid-19 cases and Indo-China tussle kept weighing on sentiment.

“With the lack of any official statements from the high level talks to defuse border tensions, investors need to be prepared for slow progress in this regard. As such, this uncertainty will keep worrying the markets for the short term,” Vinod Nair, Head of Research at Geojit Financial Services, said.

Both India and China last week agreed on a five-point plan to resolve the border tensions in eastern Ladakh, and now all eyes will be on the actual disengagement of forces on the Line of Actual Control.

Nair further said the lack of any fresh domestic triggers will mean that investors will continue to watch global cues for any directional trend for the next week. “Many small-cap companies are declaring their results over the weekend. Stock specific moves can be expected.”

Analysts also see the US Fed interest rate decision and release of inflation data at home giving some directional cues for investors.

Both retail and wholesale inflation data will be released on Monday.

Consume Price Index (CPI) inflation in July shot up to 6.93 per cent due to rise in food and fuel prices.

“Among major triggers, participants will first react to IIP numbers, followed by CPI and WPI inflation data in the coming sessions… Meanwhile, markets will continue to take cues from global indices and upcoming FOMC meet,” said Ajit Mishra, VP – Research, Religare Broking Ltd.

Industrial production shrank by 10.4 per cent in July, mainly due to lower output of manufacturing, mining and power generation sectors, official data showed on Friday.

On the Covid-19 front, the rising infection cases and death toll remained a key reason for market volatility, though the rate of fatality from the disease has dropped further.

India’s Covid-19 tally of cases sprinted past 47 lakh with 94,372 new infections being reported in a day, while 37,02,595 people have recuperated taking the national recovery rate to 77.88 per cent on Sunday, according to the Union Health Ministry data.

The total coronavirus cases mounted to 47,54,356, while the death toll climbed to 78,586 with 1,114 people succumbing to the infection in a span of 24 hours, the data showed.

The fatality rate has further dropped to 1.65 per cent.

The major global event lined up this week is the US Fed interest rate decision.

“This week, investors would track Fed monetary policy meet, news flows around Covid vaccine trials and global cues,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Nirali Shah, Senior Research Analyst, Samco Securities, said, “Given no major occurrence in domestic markets, markets would be majorly driven by heavyweights. RIL is one example which is experiencing a second wave of fund raising and this could keep the sentiment positive in the coming weeks.”

Besides, trend in forex market and Brent crude oil will also influence trading in the domestic equity market, analysts said.

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