TORONTO (Reuters) — The Toronto Stock Exchange's main equity index has been a one-way upward bet for much of the year, but shifting market factors have some saying it might be wise to play it safe and lighten positions.Following a rise of 1.5 percent this past week, the S&P/TSX composite index is up 9.4 percent this year, but doubts are emerging about earnings quality, inflation and general summer sluggishness.

"We think we're going to be lucky to move sideways and, if anything, we think that a 10 to 15 percent correction here is certainty within the realm of possibility," said Michael Sprung, president of Sprung & Co. Investment Counsel in Toronto.

The index closed on Friday at 14,118.70 and is now just shy of its record high of 14,216.21, reached in May and nearly surpassed in June.

But summer months have been historically hard on stock prices, as the pace of market-moving news slows and investors head out on vacation, pulling volumes to a trickle and often resulting in a slow drift downward.

Indeed, the market has been trading largely sideways for the past two months, although analysts say there are more than just seasonal factors at work.

"Our feeling has been that there are inflationary pressures building here that people are just trying to ignore," said Sprung.

The Bank of Canada's acknowledgement in May that it had underestimated inflationary risks has shifted market expectations towards interest rate hikes, a sentiment that was firmed by strong June jobs data released on Friday.

Dealers expect the bank will raise rates by a quarter percentage point on Tuesday, and likely again in September, a move that will make borrowing more expensive and prompt less risk-taking among investors.