Industrial production and inflation data will dictate the near-term trend of benchmark indices which rallied to record highs buoyed by FIIs betting on a strong mandate as a result of the upcoming Lok Sabha elections, experts have said.
Asian stock markets on Monday will immediately react to better-than-expected US employment gains announced on Friday. Nonfarm payrolls increased 175,000 in February, boosting speculation that US Federal Reserve will continue to pare monetary stimulus.
The BSE 30-share benchmark Sensex hit a lifetime intra-day high of 21,960.89 on Friday before settling at 21,919.79. Over the week, the Sensex has seen a spurt of nearly 800 points or 3.79 per cent.
FIIs bought shares worth Rs 5,044.54 crore in the week, including provisional data of March 7.
Industrial production data for January will come out on Wednesday. The consumer price index (CPI) for February will be announced on Wednesday, while data for inflation based on the wholesale price index (WPI) is due on Friday.
These macroeconomic data releases are key ahead of the Reserve Bank of India's monetary policy review on April 1.
"Going ahead, sustained FII flows, stable currency, improving macroeconomic data, probability of a stable government post elections could take markets higher. At the same time, adverse geopolitical developments could potentially prick this rally," said Sanjeev Zarbade, Vice President- Private Client Group Research, Kotak Securities.
Corporate advance tax data is also expected to provide cues to the next batch of earnings, traders said.
Market participants said the next major trigger for the stock market is the outcome of the upcoming general elections that will be held between April 7 and May 12.
"Now, the stage is set for more fireworks in days to come as we have some important data lined up next week, IIP and CPI inflation on March 12 and WPI inflation on March 14," said Jayant Manglik, President-retail distribution, Religare Securities Limited.
The broad-based CNX Nifty of the NSE closed on Friday at a record high of 6,526.65.
According to Vivek Gupta, Director Research, CapitalVia Global Research Limited, "Overall trend of the Nifty is bullish. In upcoming trading session it may trade within the range and can show correction below the level of 6,439."
Analysts said a sharp drop in current account deficit (CAD) and easing inflation have fuelled expectations that the economy will see a turnaround soon.