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Stock markets will track the wholesale and consumer price based inflation data this week for near-term direction, besides foreign fund inflow will also be a key trigger for the indices, say experts.
"Investor confidence has risen as FIIs continue to pump in liquidity into the stock market. Buoyed by the liquidity, markets have seen spectacular rally recently," Rakesh Goyal, Senior Vice President, Bonanza Portfolio said.
Foreign institutional investors (FIIs), the key driver of Indian markets, have poured in over Rs 68,000 crore ( $12.7 billion) since the beginning of 2013.
"Indian markets have shown remarkable recovery during last one month led by global surge in liquidity. So far, Q4 FY13 results has been broadly in-line with the expectations with no major disappointment.
"Going ahead investors will keep an eye on further reforms to bring back economy on growth path," said Vivek Mahajan, Head of Research at Aditya Birla Money.
Among key earnings announcements this week are ITC, Dr Reddy's Laboratories, Bajaj Auto and Reliance Capital.
Oil and auto stocks will also be in focus as diesel prices were last week hiked by Rs 1.02 per litre.
According to Dipen Shah, Head of Private Client Group Research, Kotak Securities: "Markets have been moving up at a fast pace in the past few weeks on the back of supportive global markets, consistent FII flows and better-than-expected quarterly results."
Markets will look forward to domestic factors like initiation of further fiscal reforms, interest rate cuts, monsoons and the remaining quarterly results, to move up from the current levels on a sustainable basis. Global markets and FII flows will be the other important factors to watch out for, he added.
The BSE benchmark Sensex gained nearly 3% last week. The stock exchanges conducted a special trading session for a short duration on Saturday as the Bombay Stock Exchange (BSE) tested its disaster recovery software.
