Indian shares set to slide further as oil, inflation surge

MUMBAI, June 28, 2008 (AFP) – Indian shares are set to run into rough weather again next week, as global crude prices and domestic inflation continue to surge, raising fears of further monetary tightening, dealers said. Investors are also wary of rising political uncertainty with media reports suggesting Friday that India’s ruling Congress party may decide to pursue a controversial atomic energy deal with the United States.

This would alienate leftist allies, who oppose the deal, and could push the country into early elections.

For the week to June 27, the benchmark 30-share Sensex index fell 5.27 percent or 769.07 points to 13,802.22, its lowest closing for the year.

On Friday, it was reported annual inflation in Asia’s third-largest economy rose to 11.42 percent for the week ended June 14, against 11.05 percent for the previous week.

The rise was marginally higher than analysts’ expectations.

“The Sensex broke the key 14,000 level intra-day, indicating that near-term concerns persist. High oil prices will impact the already slowing global economy,” said Amitabh Chakraborty, president of brokerage Religare Securities.

The Reserve Bank of India has recently raised rates to combat surging i