Mumbai, Oct 28: The Muhurat trading session is out of the way — and the market will now be looking at some key data and developments during the course of the week that will determine which way indices move.

The US will continue to be the focal point for the markets with the US Federal Reserve (Fed) due to meet on Wednesday to decide on a possible rate cut. On the very next day, the US commerce department is due to announce economic growth figures for the third quarter (July to September). The pundits are already speculating about a 0.5 percentage point contraction in the world’s largest economy.

Both events will have a crucial bearing on the way that the markets will move in the next few days.

The Fed is expected to trim interest rates by 50 basis points. Some even project that the Fed will go for a 100 basis point cut, a development which could provide a huge boost to stock markets in the near term. On the other hand, a contraction in the US economy would only lend credence to the Cassandras who have been predicting a deep recession in the US that could run through 2009.

M.L. Soneji, chief operating officer of the Bombay Stock Exchange, said: “There is nothing wrong with our markets, economy, companies or the banking sector. Overseas developments have triggered the selloff by foreign institutional investors. The course of our markets will change only after the situation stabilises over there.”

Analysts said the elections — both in the US and in a couple of Indian states over the next few months — would also influence market movements.

“I expect the markets to move up consistently only after March,” said one analyst.

But there are a couple of other local factors that will also weigh on investors’ minds in the near term: first, October has seen a surge in net FII selling at Rs 15,515.20 crore till October 27. This makes it the second worst month after January when the overseas investors sold Rs 29.447.15 crore more than they bought. The market will be hoping that the tide will start to turn just a wee bit before the customary selling that one sees in mid-December.

The other factor that will be keenly watched is the movement of the rupee which slid to Rs 50.15 against the dollar last Friday. The currency did not go into a free fall only because the RBI intervened aggressively.

Finally, over 1000 companies are due to announce their results on Friday.