After smart gains of the past two weeks, the stock market is likely to see some profit-booking this week amid investors tracking crucial data on inflation and industrial production, analysts said.
Besides, hopes of interest rate cut by the Reserve Bank will guide investor sentiment, they said.
Following the government's winning vote in Parliament on FDI in multi-brand retail, investors are now expecting further financial reforms.
"After gaining more than 4.5 per cent in last two weeks, the Sensex is likely to witness some profit-booking," said Rakesh Goyal, Vice President at Bonanza Portfolio.
"Buying is seen in almost all sectors which is positive for the coming sessions. However, economic data such as inflation and IIP (Index of Industrial Production) as well as probability of interest rate cuts by RBI this month shall have near term impact on market sentiment," he added.
The RBI is scheduled to announce its mid-quarter monetary policy review on December 18.
Several important bills are likely to be taken up by Parliament for clearance during the ongoing Winter Session including Companies Bill, Competition Bill and FDI in insurance and pension sectors.
"The trigger the Indian markets may look for is the IIP data and inflation," said Alex Mathews, Head Research, Geojit BNP Paribas Financial Services.
Meanwhile, two public offers -- by telecom tower company Bharti Infratel and PC Jeweller -- will hit the capital market this week.
Bharti Infratel, the tower arm of the country's leading telecom service provider Bharti Airtel, is planning to hit the market on December 11 with an Initial Public Offer to raise around Rs 4,500 crore.
Besides, PC Jeweller Ltd will launch its IPO on December 10 to raise Rs 609 crore.
On the global front, the market is also waiting for the two-day meeting of the Federal Open Market Committee (FOMC) on interest rates in the US on December 11-12.
Asian markets on Monday will also react to the US jobs data where the country created 146,000 jobs in November, bringing down unemployment rate to 7.7 per cent -- the lowest since the global financial crisis of 2008.
Reports said that even hurricane Sandy that hit major parts of Eastern Coast - New York and New Jersey in particular - affecting millions of people did not have much impact on jobs, thus indicating that the American economy is showing signs of strong growth.
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