The Indian market is seen opening lower on Monday, taking cues from weak Asian markets, after Moody's raised doubts about the Italian government's ability to reduce its public deficit and warned of risks to growth.
While global events will continue to have some bearing on sentiment, the government's decision on Friday to hike fuel prices may significantly influence the market direction.
After weeks of dithering, India over the weekend decided to increase diesel price by Rs 3 per litre, domestic LPG by Rs 50 per cylinder and kerosene by Rs 2 per litre and also slashed customs and excise duties on crude oil and products. This will bring some respite to the bleeding oil marketing companies and reduce their under-recoveries to the extent of Rs.21,000 crore.
The benchmark Sensex snapped its 2-week losing streak to end about 370 points higher last week, as a sharp fall in crude prices following the International Energy Agency's decision that it would release 60 million barrels of crude from its reserves eased concerns of inflationary pressures and a further hike in interest rates.
Frantic short-covering ahead of the expiry of near-month derivative contracts expiry due this Thursday helped the Nifty index end higher by about 2 percent.
Meanwhile, the major U.S. averages fell over a percent each to end near their worst levels of the session on Friday, as a negative reaction to quarterly results from Oracle and lingering concerns abut the financial situation in Europe overshadowed relatively upbeat economic data on durable goods orders for May.
Moody's placed the long-term debt and deposit ratings of 16 Italian banks and two Italian government-related financial institutions on review for possible downgrade, sparking fresh concerns over European debt problems.
For comments and feedback: editorial@rttnews.com