Stocks to react to Fed chair's speech; macroeconomic data eyed

New Delhi: Stock markets are expected to react to Fed chair Janet Yellen's speech when it opens for trade on Monday besides taking cues from macroeconomic data and investment trend by overseas investors, say experts.

Auto stocks will be in focus as companies would start unveiling monthly sales data for August, from Thursday.

Also, purchasing managers' index (PMI) data for manufacturing sector scheduled this week will have some bearing on trading, they said.

"Other domestic factors which will continue to affect sentiments this week include outcome of the monthly survey on India's manufacturing sector," said Vijay Singhania, Founder Director, Trade Smart Online.

Among key earnings this week are from DLF, MOIL, Indian Oil Corporation and Bharat Petroleum Corporation.

Fed chair Janet Yellen in an address to central bankers in Wyoming said the case for an increase in interest rate has strengthened.

"Over last two or three trading sessions as well, the likely direction US Fed will take on rate hikes has been an important factor for local markets," said Pankaj Sharma, Head of Equities, Equirus Securities.

"This is the next most important global event and will deeply influence the markets if and when the US Fed will be able to muster enough courage to hike rates this year. There is no doubt that this event may not be good for emerging markets including India and we would expect that markets may react negatively to the US Fed Chair statements on Monday," Sharma added.

Over the past week, the Sensex fell by 294.75 points or 1.04 percent and the NSE Nifty slipped 94.35 points or 1.08 percent. Both the indexes posted second straight weekly losses.