Sensex may succumb to selling pressure in opening trades after rallying over 500 points on Friday as inflation and rate hike fears continue to loom. The Nifty futures on the Singapore Exchange declined 68 points, to 5,416.
On Friday after market hourses Empowered Group of Ministers decided to take a bold step of raising diesel prices by Rs 3 per litre, kerosene by Rs 2 per litre and cooking gas by Rs 50 per cylinder which may boost oil market companies. However diesel and cooking coal price hike may further stoke inflation and prompt the Reserve Bank of India to continue with its tightening regime. Analysts said this development will weigh on the markets going forward. Markets may also remain volatile this week ahead of the futures and options expiry on Friday.
Oil Marketing Companies HPCL, BPCL and IOC may be on the radar after the government decided to boost the finances of the oil firms by cutting import tax on petrol and diesel to 2.5% from 7.5%. But it may strain the government's finances as it may lose tax revenue of Rs 45,000 crore.
Across Asia markets lost ground on Monday morning led by losses in energy companies due to falling crude prices. Also central bankers meeting on weekend over Europe's debt woes weighed on the markets as they decided to increase capital buffer kept by banks under the basel requirements.
Japan’s Nikkei Stock Average was down 0.9%, the Hang Seng Index lost 1% and South Korea’s Kospi declined 1.2%.
