Indian stocks which have been beaten down lately amid the ongoing rout in global markets due to heightened fears over China, may continue to witness some volatility this week as traders across the globe stay jittery ahead of the upcoming Federal Reserve monetary policy meet on September 15-16, where the world's top central bank may offer some cues over the timing of a maiden interest rate hike since 2006.
The movement of the rupee against the dollar, overseas investment trend and global cues will continue to dictate stock market trend.
On the domestic front, the July IIP data will also shape the direction of Dalal Street this week. A slowdown in industrial output growth may raise calls for an interest rate cut from the Reserve Bank of India (RBI) at its next policy meet on September 29. India's industrial output expanded by 3.8 per cent in June 2015 from the same month a year ago, up from a 2.7 per cent annual expansion in May 2015.
Recent factory numbers have been disappointing as output of the eight core infrastructure sectors that has a 38 per cent weightage in the IIP expanded at the weakest pace in three months in July 2015, up by only 1.1 per cent from the year ago month. Meanwhile, India's manufacturing activity expanded at a slower pace in August with the PMI falling to 52.3 from July's six-month high of 52.7, as production and demand softened, offering further evidence of an economic slowdown.
Marking a fourth straight weekly drop, the 30-share Sensex shed 1,190.48 points or 4.51 per cent last week to end at 25,201.9, the lowest level in more than a year.