Domestic equities are expected to start the week on a positive note amid positive global cues.

SGX Nifty was up over 70 points, over 18,200, indicating a gap-up opening for the markets.

Asian markets were largely positive as markets await key economic data from China.

With the Q2 earnings season soon to end, market's focus will shift to global cues, according to marketmen.

“The market is still looking for direction as headline indices Nifty and Sensex are consolidating however many pockets beneath the surface are doing well. We were seeing stock-specific movement amid the Q2 earning session and now the market's focus will shift to global cues. Global markets are also trading volatile after higher than expected US inflation numbers however there is no panic reaction. US dollar index is trading above 95 level and US bond yields are also inching higher that could be a cause of concern,” Santosh Meena, Head of Research, Swastika Investmart Ltd said.

On the domestic front, market is expected to react to Consumer Price Index (CPI) and Index of Industrial Production (IIP) numbers. Retail inflation based on the CPI rose marginally to 4.48 per cent in October from 4.35 per cent the previous month. At the same time, industrial growth based on the IIP decelerated on a sequential basis to 2.5 per cent in September.

“Market will react to IIP and CPI numbers on Monday where inflation numbers are slightly higher than expectations while IIP numbers are much weaker than expectations,” said Meena.

Investors are also waiting WPI inflation numbers which will be announced today during market hours.

As the retail inflation is still in a comfortable zone, the Monetary Policy Committee (MPC) is unlikely to change its stance on the policy interest rates in its December meeting, according to experts.

Valuation concerns

However, valuation concerns are likely to arrest market momentum. Two more global financial advisory firms have joined downgrade bandwagon of Indian equities. Goldman Sachs and CLSA are the latest to advise investors to turn away from Indian stocks and book profits on valuation concerns.

In the last few days, UBS, Nomura and Morgan Stanley had already downgraded Indian stocks.

FIIs remained in sell mode over the past week, selling equities worth ₹4,900 crore while DIIs bought equities worth ₹5,392 crore in the cash market last week. However, contrary to their bearish stance, FIIs bought equities worth ₹511.1 crore on Friday while DIIs bought equities worth ₹851.41 crore.

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "If we exclude the investments made by FPIs in the primary market, the net sales in equity through the stock market jumps to ₹10,949 crore. Coming on top of the October sale figure of ₹13,550 crore, this is big selling indeed. It appears that FIIs are exiting on valuation concerns.”

“The important point to note is that the old scenario where FIIs representing smart money dictated market trends is over for the present. DIIs flush with money and the exuberant retail investors are calling the shots now. This can change if a major trigger causes a big pullback from the present lofty levels. We are in a period of uncertainty," added Dr Vijayakumar.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd said, “In India, FPIs have been net sellers so far this month. With the 2QFY22 results season coming towards the end, investor focus will shift towards macro developments. Going ahead, inflation, oil prices, FII flows, and Central Bank policies are some of the key factors directing the markets.”

This week will be a shorter week with the market remaining close on Friday on account of Gurunanak Jayanti.

This week will be an IPO heavy week with SJS Enterprises, PB Fintech and Sigachi Industries listing on the bourses today and One97 Communications IPO set to open later this week.