Rising global oil prices, widening fiscal deficit and profit booking by investors weighed down on the markets today with the BSE Sensex heading for its first fall in eight weeks.
At around 3 pm, the BSE Sensex was trading down 138 points 17939 wile the Nifty was down 47 points at 5430.Traders were seen piling up positions in metal, consumer durables and IT sector while selling was witnessed in realty, capital goods and bankex sector. DLF from Realty space was seen trading in red pushing the markets down.
Industry heavyweight, RIL was seen trading in the red, exerting more pressure on the market. In view of a sharp drop in output from RIL's eastern offshore KG-D6 block, an Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee is scheduled to meet later in the day to consider changes in the natural gas allocation policy.
India imports about 80 percent of the oil it consumes and the rise in prices could worsen a widening trade deficit.
"A widening fiscal deficit and the worry that the rising crude oil prices may push up inflation are making investors cautious," Arun Kejriwal, a strategist at research firm KRIS told Reuters.
In an interview with CNBC-TV18, Jal Irani, Managing Director, Oil & Gas Research, Macquarie Group said the increasing isolation of Iran on the global scene could send crude oil prices soaring.
Macquarie estimates that around $2.5 million barrels of oil is at risk per day due to the growing tension in the Middle East, which OPEC woudl find very difficult to match. Already, many countries have already stopped importing oil from Iran, while some others, India include, have reduced their purchases from Iran.
Brent crude climbed above $124, on track for a fifth straight weekly gain, as worries over Iranian supply and upbeat US data offset concerns that high oil prices could snuff out demand.
Lenders such as ICICI Bank and HDFC Bank were among the big losers as market expectations for a rate cut in March was tempered by the rally in world oil prices, which could make it difficult for the central bank to ease policy.
The benchmark, which has gained almost 17 percent since the end of December, is down about 2 percent so far this week
ICICI Bank was down more than 2 percent and HDFC Bank shed 1.1 percent.
State Bank of India , the country's biggest lender, shed 1.2 percent. The stock was also weighed down after the state-run bank priced a planned share sale to the government at a discount to Thursday's close.
Watch more on CNBC TV 18
Iran crisis could send crude soaring: Macquarie's Jal Irani
First Published On : Feb 24, 2012 15:31 IST