Domestic bourses may track weak Asian stocks

The market may remain range bound in absence of any positive trigger in near term. Asain markets were trading lower today, 26 June 2007 and US markets also settled slightly lower on Monday, 25 June 2007.

The 30-share BSE Sensex gained 20.36 points or 0.14% at 14,487.72 on Monday, 25 June 2007 without much movement on either side. It started firm, but later pared gains tracking weak global markets.

Asian markets saw high volatility in opening session today, 26 June 2007, with Japan’s Nikkei 225 index declining on losses in shares of exporters such as Sony Corp. and Canon Inc., while food stocks such as Ajinomoto Co. edged higher. Nikkei was down 56.45 points or 0.31% at 18,031.03. Taiwan's Taiwan Weighted (down 0.44% at 8,900.07), Singapore's Straits Times (down 0.44% at 3,564.57), South Korea's Seoul Composite (down 0.73% at 1,744.95) all edged lower. However, Hong Kong's Hang Seng rose 0.36% at 21,901.61.

US markets gave up a big advance and turned lower yesterday, 25 June 2007, as investors suffered a renewed case of the jitters ahead of the Federal Reserve’s meeting on interest rates later this week. The Dow Jones industrial average fell 8.21 points, or 0.06%, to 13,352.05, after rising more than 100 points earlier in the day. Broader indices also declined. The Standard & Poor's 500 index fell 4.82 points, or 0.32%, to 1,497.74, and the Nasdaq Composite lost 11.88 points, or 0.46%, to 2,577.08.

As per provisional data, FIIs were net buyers to the tune of Rs 19.84 crore in equities, while domestic institutional investors (DIIs) bought shares worth a net Rs 179.23 crore on Monday, 25 June 2007.

Volatility is likely to be high on the bourses in the short term ahead of expiry of June 2007 derivatives contracts on Thursday, 28 June 2007. As is the case at the time of expiry of near-month contracts, the extent of rollover to July 2007 contracts from June 2007 contracts will dictate the trend in the near term. A higher rollover indicates that the market players expect bourses to remain firm in the month ahead and vice versa.

Over the next few months, the progress of the July-September monsoon will hold key. The weather office said in April 2007 that this year’s monsoon was likely to be 95% of the long-term average, with a 5% margin of error. The annual monsoon is vital for India’s economic health as it is the main source of water for agriculture, which generates more than a fifth of the gross domestic product