Equities seen up on lower oil, firmer Asia
August 25th, 2008 | by admin |Rating: 0
Sensex is expected to start higher on Monday, bolstered by a sharp drop in oil prices and firmer overseas markets, but rising inflation could keep a lid on gains.
Oil, India’s biggest import, extended a decline and was hovering just above $114 a barrel after tumbling 5.4 per cent on Friday, on diminishing supply concerns and easing geopolitical tensions as Russia withdrew the bulk of its troops from Georgia.
Asian stocks rebounded from a two-year trough as the lower oil prices lifted exporter shares. US stocks rallied on Friday to score their best daily gain in two weeks as hopes that Lehman Brothers may attract a major investor lifted financial stocks and falling oil prices soothed worries about inflation.
“We are expected to open up with a gap largely on overseas cues,” Arun Kejriwal, strategist at research firm KRIS, said.
“But I reckon any gains would be capped around 2 per cent at the end of the day as concerns about our markets have not changed.”
Data released on Thursday showed India’s annual inflation in early August at 12.63 per cent, the highest since annual numbers in the current series became available in 1995, and analysts said the rate could top 14 per cent.
The 30-share BSE index rose 1.11 per cent to 14,401.49 on Friday, but is down 29 per cent so far this year.
Data also showed advance tax payments by top 10 firms were up only 7 per cent for the June quarter with smaller firms making up the shortfall.
By 0331 GMT, Tokyo’s Nikkei was up 2.1 per cent and MSCI’s measure of other Asia Pacific stocks climbed 1.3 per cent. The Nifty futures traded in Singapore was 1.8 per cent up.
