Trading in the domestic stock market would be influenced by trends in the global equities, macroeconomic data and foreign fund movement in a holiday-shortened week, analysts said.
Markets may face volatile trends on Monday after Federal Reserve Chair Jerome Powell's speech at the Fed's annual economic symposium in Jackson Hole on Friday.
"Powell sounded ultra hawkish in his brief speech at Jackson Hole. Markets will be concerned about the tight monetary conditions persisting longer than expected. The near-term impact on equity markets will be negative," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
Federal Reserve Chair Jerome Powell delivered a stark message on Friday: The Fed will likely impose more large interest rate hikes in the coming months and is resolutely focused on taming the highest inflation in four decades.
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"US Fed statement post the Jackson Hole symposium indicated the central bank's strong commitment towards controlling inflation over growth," Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said.
He further said that the US markets fell more than 3 per cent. Indian markets are also likely to react negatively on Monday with increasing volatility over the next few days.
Wall Street had ended significantly lower on Friday.
Meanwhile, the markets would be closed on Wednesday for Ganesh Chaturthi.
"The direction of global markets will be the dominant factor for this week while on the domestic front, India's GDP number and August auto sales numbers will be important factors. Apart from this, the market will also have an eye on the movement of crude oil prices, the dollar index, and the US bond yields," Santosh Meena, Head of Research, Swastika Investmart Ltd, said.
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The Purchasing Managers’ Index (PMI) data for the manufacturing sector, scheduled to be announced on Thursday, would also influence trading, analysts said.
"This week is a holiday-shortened one and it marks the beginning of the new month also so, participants will be eyeing important data like auto sales numbers. Amid all, the performance of the global indices especially the US would remain on the radar for cues," Ajit Mishra, VP - Research, Religare Broking Ltd, said.
The investment pattern of Foreign Institutional Investors (FIIs) and the rupee-dollar trends would also continue to drive markets.
Last week, the Sensex tumbled 812.28 points or 1.36 per cent, while the Nifty lost 199.55 points or 1.12 per cent.
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